0001019687-12-004322.txt : 20121129 0001019687-12-004322.hdr.sgml : 20121129 20121128180940 ACCESSION NUMBER: 0001019687-12-004322 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20120831 FILED AS OF DATE: 20121129 DATE AS OF CHANGE: 20121128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Gunpowder Gold Corp CENTRAL INDEX KEY: 0001454298 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 263751595 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34976 FILM NUMBER: 121230001 BUSINESS ADDRESS: STREET 1: 4830 IMPRESSARIO COURT STREET 2: SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89149 BUSINESS PHONE: (702) 380-7865 MAIL ADDRESS: STREET 1: 4830 IMPRESSARIO COURT STREET 2: SUITE 109 CITY: LAS VEGAS STATE: NV ZIP: 89149 FORMER COMPANY: FORMER CONFORMED NAME: Spartan Business Services Corp DATE OF NAME CHANGE: 20090120 10-K 1 gunpowder_10k.htm FORM 10-K

 

U.S. Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-K

 

S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the fiscal year ended August 31, 2012

 

or

 

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File Number: 001-34976

 

Gunpowder Gold Corporation

(Exact name of registrant as specified in its charter)

 

Nevada   26-3751595
(State or other jurisdiction of   (I.R.S. Employer Identification No.)
incorporation or organization)    

 

4830 Impressario Court

Suite 109

Las Vegas, NV 89149

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: (702) 380-7865

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $.001 par value

Title of Class

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  £     No  x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   £     No  x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  £

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x    No £

 

Indicate by check mark if disclosure of delinquent filers pursuant to Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer £ Accelerated filer £
Non-accelerated filer £ Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  £    No  x

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as of February 28, 2012 was approximately $247,323.

 

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the last practicable date: 92,641,961 shares outstanding.

 

 
 

 

 

DOCUMENTS INCORPORATED BY REFERENCE

 

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933:  None.

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

GUNPOWDER GOLD CORPORATION

 

TABLE OF CONTENTS 

 

Glossary of Mining Terms

 

PART I
Item 1 Business   3
Item 1A Risk Factors   5
Item 1B Unresolved Staff Comments 12
Item 2 Properties 12
Item 3 Legal Proceedings 16
Item 4 Mine Safety Disclosures 16
     
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16
Item 6 Selected Financial Data 17
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 7A Quantitative and Qualitative Disclosures About Market Risk 19
Item 8 Financial Statements and Supplementary Data 19
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 19
Item 9A Controls and Procedures 19
Item 9B Other Information 20
     
PART III
Item 10 Directors, Executive Officers and Corporate Governance 20
Item 11 Executive Compensation 22
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 23
Item 13 Certain Relationships and Related Transactions, and Director Independence 24
Item 14 Principal Accounting Fees and Services 24
     
PART IV
Item 15 Exhibits, Financial Statement Schedules 25
     
Signatures 26

 

 

 

 
 

 

 

Glossary of Mining Terms

 

Adit(s), Historic working driven horizontally, or nearly so into a hillside to explore for and exploit ore.

 

Adularia. A potassium-rich alteration mineral – a form of orthoclase.

 

Air track holes. Drill hole constructed with a small portable drill rig using an air-driven hammer.

 

BLEG sampling. Bulk leach sampling. A large sample of soil or rock that is leached using cyanide to determine gold and silver content down to a detection limit of as little as 1.0 parts per billion.

 

CSMT Survey. A Controlled Source Magneto-telluric geophysical method used to map the variation of the Earth’s resistance to conduct electricity by measuring naturally occurring electric and magnetic fields at the Earth’s surface.

 

Controlled Source Magneto-telluric Survey (CSMT). The recording of variations in a generated electrical field using sophisticated geophysical survey methods.

 

Core holes. A hole in the ground that is left after the process where a hollow drill bit with diamond chip teeth is used to drill into the ground. The center of the hollow drill fills with the core of the rock that is being drilled into, and when the drill is extracted, a hole is left in the ground.

 

Felsic Tertiary Volcanic Rocks. Quartz-rich rocks derived from volcanoes and deposited between two and sixty-five million years ago.

  

Geochemical sampling. Sample of soil, rock, silt, water or vegetation analyzed to detect the presence of valuable metals or other metals which may accompany them. For example, arsenic may indicate the presence of gold.

 

Geologic mapping. Producing a plan and sectional map of the rock types, structure and alteration of a property.

 

Geophysical survey. Electrical, magnetic, gravity and other means used to detect features, which may be associated with mineral deposits

 

Ground magnetic survey. Recording variations in the earth’s magnetic field and plotting same.

 

Ground radiometric survey. A survey of radioactive minerals on the land surface.

 

Leaching. Leaching is a cost effective process where ore is subjected to a chemical liquid that dissolves the mineral component from ore, and then the liquid is collected and the metals extracted from it.

 

Level(s), Main underground passage driven along a level course to afford access to stopes or workings and provide ventilation and a haulage way for removal of ore.

 

Magnetic lows. An occurrence that may be indicative of a destruction of magnetic minerals by later hydrothermal (hot water) fluids that have come up along faults. These hydrothermal fluids may in turn have carried and deposited precious metals such as gold and/or silver.

 

1
 

 

Patented or Unpatented Mining Claim. In this Annual Report, there are references to “patented” mining claims and “unpatented” mining claims. A patented mining claim is one for which the U.S. government has passed its title to the claimant, giving that person title to the land as well as the minerals and other resources above and below the surface. The patented claim is then treated like any other private land and is subject to local property taxes. An unpatented mining claim on U.S. government lands establishes a claim to the locatable minerals (also referred to as stakeable minerals) on the land and the right of possession solely for mining purposes. No title to the land passes to the claimant. If a proven economic mineral deposit is developed, provisions of federal mining laws permit owners of unpatented mining claims to patent (to obtain title to) the claim. If one purchases an unpatented mining claim that is later declared invalid by the U.S. government, one could be evicted.

 

Plug. A vertical pipe-like body of magma representing a volcanic vent similar to a dome.

 

Quartz Monzonite. A medium to coarse crystalline rock composed primarily of the minerals quartz, plagioclase and orthoclase.

 

Quartz Stockworks. A multi-directional system of quartz veinlets.

 

RC holes. Short form for Reverse Circulation Drill holes. These are holes left after the process of Reverse Circulation Drilling.

 

Resource. An estimate of the total tons and grade of a mineral deposit defined by surface sampling, drilling and occasionally underground sampling of historic diggings when available.

 

Reverse circulation drilling. A less expensive form of drilling than coring that does not allow for the recovery of a tube or core of rock. The material is brought up from depth as a series of small chips of rock that are then bagged and sent in for analysis. This is a quicker and cheaper method of drilling, but does not give as much information about the underlying rocks.

 

Rhyolite plug dome. A domal feature formed by the extrusion of viscous quartz-rich volcanic rocks.

 

Scintillometer survey. A survey of radioactive minerals using a scintillometer, a hand-held, highly accurate measuring device.

 

Scoping Study. A detailed study of the various possible methods to mine a deposit.

 

Silicic dome. A convex landform created by extruding quartz-rich volcanic rocks

 

Stope(s), An excavation from which ore has been removed from sub-vertical openings above or below levels.

 

Tertiary. That portion of geologic time that includes abundant volcanism in the western U.S.

 

Trenching. A cost effective way of examining the structure and nature of mineral ores beneath gravel cover. It involves digging long usually shallow trenches in carefully selected areas to expose unweathered rock and allow sampling.

 

Volcanic center. Origin of major volcanic activity

 

Volcanoclastic. Coarse, unsorted sedimentary rock formed from erosion of volcanic debris.

 

2
 

 

PART I

 

Forward-Looking Statements

 

This Annual Report on Form 10-K contains forward-looking information. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management of Gunpowder Gold Corporation. (hereinafter referred to as the “Company,” “Gunpowder Gold” or “we”) and other matters. Forward-looking information may be included in this Annual Report on Form 10-K or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by the Company. One can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Annual Report on Form 10-K or in documents incorporated by reference in this Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

 

The Company has based the forward-looking statements relating to the Company’s operations on management’s current expectations, estimates and projections about the Company and the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.

 

Item 1.  Description of Business

 

Gunpowder Gold Corporation (the “Company) is engaged in natural resource exploration and is focused on the acquisition, exploration and development of natural resource properties. Currently, we are in the exploration state and are undertaking exploration programs in Arizona.

 

History

 

On November 19, 2008, the Company was incorporated under the laws of the State of Nevada, with the corporate name of Spartan Business Services Corporation..  The Company intended to provide various business services to third parties but did not conduct any active business.

 

On April 9, 2009, the Securities and Exchange Commission declared our Registration Statement on Form S-1 to be effective. We registered 4,000,000 shares of Common Stock at an offering price of $.01 in order to raise $40,000 as our initial capital.

 

On August 10, 2010, Mr. Neil J. Pestell acquired control of the Company through his acquisition of all of the common stock of the Company owned by a former Director. Effective August 10, 2010, Mr. Pestell became the sole director, Chief Executive Officer, President, Treasurer and Secretary of the Company and promptly chose to redirect the Company resources and pursue potential mining and exploration opportunities for gold, silver and precious metals.

 

In November 2010, the Company revised and restated its Articles of Incorporation to change its name to Gunpowder Gold Corporation, and to increase the amount of authorized capital to 305,000,000, consisting of 5,000,000 Preferred shares and 300,000,000 Common shares, and to affect a 10:1 forward stock split. The Company changed its trading symbol on the over-the-counter Bulletin Board (OTCQB) to GUNP to reflect this new focus.

 

On January 21, 2011, the Company entered into an Option Agreement with an unrelated Nevada corporation ("Optionor"), as amended. Optionor granted the Company the sole and exclusive right and option to acquire an undivided 100% right, title and interest in and to the Dome Rock Property being located in La Paz County, Arizona subject to a 3.0% net smelter royalty ("NSR"). The 1,280 acre Dome Rock property, consists of 62 unpatented mining claims in the Dome Rock Mountains in the northwest area of the State of Arizona, in the fairway of the world famous Walker Lane Gold Trend (the "Property").

 

3
 

 

On January 24, 2011, Mr. Richard Kehmeier and Mr. Dennis Lance were appointed Directors of the Company.

 

On December 13, 2011, Mr. Pestell resigned from the Company as Director and Officer positions. On December 13, 2011, Mr. Michael Nott was appointed Chief Executive Officer, President, Treasurer and Secretary of the Company.

 

On January 17, 2012, the Company entered into a new agreement which replaced the agreement dated January 21, 2011. Pursuant to this new agreement the Company (the “Optionee”) has sole excusive right and option to acquire 100% undivided right, title and interest in a mineral claim, located in La Paz County, Arizona, known as the Dome Rock Property subject to a 3% NSR. The effect of the transaction was to preserve the Company’s rights and cash payments required under the old option agreement which are still required under the new option agreement, but their due dates were all extended by approximately one year.

 

On October 25, 2012, Mr. Lance resigned from the Company as Director.

 

Business Operations

 

We are a natural resource exploration and mining company with an objective of acquiring, exploring, and if warranted and feasible, developing natural resource properties. Our primary focus in the natural resource sector is gold. We are an exploration stage company.

 

Though the Company could focus on developing a resource property from the identification stage to the stage of mining production, the costs and time frame for doing so are considerable. The subsequent return on investment for our shareholders would be very long term. Therefore, we anticipate selling or partnering any ore bodies that we may discover to a major mining company. Many major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By selling or partnering a deposit found by Gunpowder Gold Corporation to these major mining companies, it would provide an immediate return to our shareholders eliminating the need for a long term focus. This strategy also mitigates the need for the Company to raise considerable exploration capital, source further management expertise in this specialized field and also minimizes exposure to the many risks of mine startup. If successful, this strategy will provide the Company with a future capital source to support future operations and growth.

 

The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have either optioned or purchased contain commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan and any money spent on exploration would be lost.

 

Natural resource exploration and development requires significant capital and our assets and resources are limited. Therefore, we anticipate participating in the natural resource industry through the selling or partnering of our properties, the purchase of small interests in producing properties, the purchase of properties where feasibility studies already exist or by the optioning of natural resource exploration and development projects. To date we have a property under option, and are in the early stages of exploring this property. There has been no definitive indication as yet that any commercially viable mineral deposits exist on the property, and there is no assurance that a commercially viable mineral deposit exists on the property. Further exploration will be required before a final evaluation as to the economic and legal feasibility is determined.

 

Competition

 

The mineral exploration industry, in general, is intensively competitive and even if commercial quantities of ore are discovered, a ready market may not exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital.

 

4
 

 

Government Regulation

 

The federal government and various state and local governments have adopted laws and regulations regarding the protection of natural resources, human health and the environment. We will be required to conduct all exploration activities in accordance with all applicable laws and regulations. These may include requiring working permits for any exploration work that results in physical disturbances to the land and locating claims, posting claims and reporting work performed on the mineral claims. The laws and regulations may tell us how and where we can explore for natural resources, as well as environmental matters relating to exploration and development. Because these laws and regulations change frequently, the costs of compliance with existing and future environmental regulations cannot be predicted with certainty.

 

Any exploration or production on United States Federal land will have to comply with the Federal Land Management Planning Act which has the effect generally of protecting the environment. Any exploration or production on private property, whether owned or leased, will have to comply with the Endangered Species Act and the Clean Water Act. The cost of complying with environmental concerns under any of these acts varies on a case-by-case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.

 

Other than the normal bonding requirements, there are no costs to us at the present time in connection with compliance with environmental laws. However, since we do anticipate engaging in natural resource projects, these costs could occur at any time. Costs could extend into the millions of dollars for which we could be liable. In the event of liability, we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability is limited to our percentage share, any significant liability would wipe out our assets and resources.

 

Employees

 

Currently, we have no full time employees. Our sole officer and two Directors provide planning and organizational services on a part-time basis.

 

Item 1A.   Risk Factors

 

General Risks

 

Our auditors have issued a going concern opinion expressing substantial doubt that we can continue as a going concern.

 

The probability of our future prospective mining claims having commercial reserves is remote, and any funds spent on exploration could probably be lost. In all probability, our future claims do not contain any commercial reserves, or may contain reserves which are not economically feasible to recover. As such, any funds spent on exploration could, in all probability, be lost.

 

Our management has limited technical training or experience in exploring for gold and silver resources or starting and operating a mining exploration program. Further, our management has no training or experience in these areas, and as a result, may not be fully aware of many of the specific requirements related to working the claims within such industry. Our management's decisions and choices may not take into account the standard engineering or managerial approaches that mineral exploration companies commonly use. Consequently our activities, earnings, and ultimate financial success could suffer irreparable harm due to our management's lack of experience in this industry. As a result, we may have to suspend or cease activities.

 

We will need additional funding to initiate and complete the exploration processes that may be recommended by engineers. Even if we raise all of the funds which we intend to raise in any future offerings, we may not have enough capital to complete the exploration phases recommended in the geological evaluation report of our contracted mining engineer with regard to our claims. To complete the recommended exploration phases, we may be required to raise additional capital through securities offerings, debt or loans, or from our officers or directors. We cannot guarantee that we will be able to raise the capital necessary to complete the recommended phases of exploration of our future properties. If we are unable to raise additional capital, and cannot complete the recommended exploration phases, we will not be able to successfully begin operations and will not be able to realize any revenue. As a result, we would be forced to cease all operations.

 

5
 

 

The Company has not commenced any mining exploration or production, thus it has had no revenues and faces a high degree of risk. We do not own any currently producing properties, nor own any property that has proven reserves of commercially viable quantities of valuable metals. Accordingly, we have no revenues and we have no way to evaluate the likelihood that our business will be successful. We have been involved primarily in organizational activities, due diligence on potential claims, and preparing to engage a professional engineer to prepare an initial report and evaluation of future claims. We have not generated any revenues since our inception.

 

You should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays encountered in connection with the exploration of mineral properties. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. Prior to completion of our exploration stages, we anticipate that we will continue to incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the development of our future mining properties and the production of minerals from our future claims, we will not be able to earn profits or continue operations. If we are unsuccessful in addressing these risks, the business of the Company will most likely fail.

 

We lack an operating history and have losses which we expect to continue into the future. We were incorporated on November 19, 2008, and we have not realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to explore our mining claims and our ability to generate revenues from operations upon our claim. Based upon our current plans, we expect to incur operating losses in the foreseeable future. This will happen because there will be expenses associated with the research and exploration of our future mineral properties when they are acquired, and we may not generate revenues in the future. Failure to generate revenues may cause us to suspend or cease activities.

 

Because we are small and do not have much capital, we may have to limit our exploration activity which may result in a loss. As such we may not be able to complete an exploration program that is as thorough as we would like. In that event, an existing reserve may go undiscovered. Without a reserve or commercial mining operations, we cannot generate revenues unless we sell our mining claims or other mining rights.

 

Because we will have to spend additional funds to determine if we have commercial reserves, we will have to raise additional money or risk having to cease our operations. Even if we complete an exploration program and we are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling, testing, exploration, and engineering studies before we will know if we have a commercially viable gold and silver deposit. Because our current capitalization is insufficient to achieve such further drilling, testing, exploration, and engineering studies, it will be necessary to raise additional funds. If we are unable to raise such funds, we would be forced to suspend or cease our activities.

 

Because our officers and directors have other business activities and will only be devoting a percentage of their time to our operations, our operations may be sporadic with periodic interruptions or suspensions of exploration.

 

Risks in the Mining Industry

 

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages which could hurt our financial position and possibly result in the failure of our business. Mineral exploration and development involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins, and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material, adverse effect on our financial position, or could cause us to cease operations.

 

If we discover commercial reserves of precious metals on our future mineral properties, we can provide no assurance that we will be able to successfully advance the future mineral claims into commercial production. If our exploration program is successful in establishing the existence of gold and silver of commercially and economically viable tonnage and grade on any of our claims, we will require additional funds in order to begin operations of commercial production. Obtaining additional financing would be subject to a number of factors, including the market price for the minerals, investor acceptance of our claims, and general market conditions. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. The most likely source of future funds is through the sale of equity capital. Any sale of share capital will result in dilution to existing shareholders. We may be unable to obtain any such funds, or to obtain such funds on terms that we consider economically feasible.

 

6
 

 

If access to our mineral claims is restricted by inclement weather, we may be delayed in our exploration and any future mining efforts. It is possible that snow, rain, or other environmental factors could cause the mining roads providing access to our future claims to become impassable. If the roads are impassable, we would be delayed in our exploration timetable and incur unforeseen expenses.

 

If we become subject to burdensome government regulation or other legal uncertainties, our business will be negatively affected. There are federal and state governmental regulations that oversee and materially restrict mineral property exploration and development. Under United States, Canada and other mining laws, to engage in certain types of exploration will require work permits, the posting of bonds, and the performance of remediation work for any physical disturbance to the land. While such laws will not affect our future exploration plans, if we begin drilling operations on our properties, we will incur such regulatory oversight and regulatory compliance costs.

 

In addition, the legal and regulatory environment that pertains to the exploration of gold and silver is subject to change. Change in existing regulations and new regulations could increase our costs of doing business, and prevent us from beginning or continuing operations.

 

We are in a highly competitive industry. Gold and silver exploration and development is highly competitive. The Company faces competition from multinational, national, and regional companies. Many of the Company’s competitors are larger, longer established, and have far greater financial resources and exploration and operational experience than our Company. The Company may be unable to compete effectively.

 

Because of consumer demand, the demand for any gold and silver that we may recover from our future claims may be slowed, resulting in reduced revenues to the Company. Our success will be dependent on the demand for gold and silver. If consumer or industrial demand slows our revenues may be significantly affected. This could limit our ability to generate revenues, and our financial condition and operating results may be harmed, possibly resulting in loss of investment.

 

The prices of gold and silver metal is volatile, and price changes are beyond our control. The price of base metal fluctuates. The prices of base metal have been and will continue to be affected by numerous factors beyond our control. Factors that affect such metals include the demand from consumers, economic conditions, over supply from secondary sources, and costs of production. Price volatility and downward price pressure, which can lead to lower prices, could have a material adverse effect on the costs and the viability of our operations.

 

The volatility of gold or silver prices in general may adversely affect our exploration efforts. If prices for these metals decline, it may not be economically feasible for us to continue our exploration of our properties or to interest a joint venture partner in funding exploration or developing commercial production at our properties. We may make substantial expenditures for exploration or development of the properties, which cannot be recovered if production becomes uneconomical. Gold and silver prices historically have fluctuated widely, based on numerous factors including, but not limited to:

 

·industrial and jewelry demand;
·market supply from new production and release of existing bullion stocks;
·central bank lending, sales and purchases of gold or silver;
·forward sales of gold and silver by producers and speculators;
·production and cost levels in major metal-producing regions;
·rapid short-term changes in supply and demand because of speculative or hedging activities; and
·macroeconomic factors, including confidence in the global monetary system; inflation expectations; interest
·rates and global or regional political or economic events.

 

Gold and silver exploration and prospecting is highly competitive and speculative business and we may not be successful in seeking available opportunities.

 

The process of gold and silver exploration and prospecting is a highly competitive and speculative business. Individuals are not subject to onerous accreditation and licensing requirements prior to beginning mineral exploration and prospecting activities, and as such the Company, in seeking available opportunities, will compete with numerous individuals and companies, including established, multi-national companies that have substantially more experience and resources than our Company. The exact number of active competitors at any one time is heavily dependent on current economic conditions.

 

7
 

 

Because we may not have the financial and managerial resources to compete with other companies, we may not be successful in our efforts to acquire projects of value, which, ultimately, become productive. However, while we compete with other exploration companies for the rights to explore other claims, there is no competition for the exploration or removal of mineral from our prospective claims by other companies, as we have no agreements or obligations that limit our right to explore or remove minerals from our prospective claims.

 

Compliance with environmental considerations and permitting could have a material adverse effect on the costs or the viability of our projects. The historical trend toward stricter environmental regulation may continue, and, as such, represents an unknown factor in our planning processes.

 

All mining is regulated by the government agencies at the federal, state and county levels of government in the United States. Compliance with such regulation has a material effect on the economics of our operations and the timing of project development. Our primary regulatory costs are expected to be related to filing fees pertaining to the location of unpatented mining claims which were staked on Federal ground. In the event mineralization of commercial interests would be found by the proposed exploration program, obtaining licenses and permits from government agencies before the commencement of mining activities would be very expensive and time consuming. An environmental impact study may be required to be undertaken on our property in order to obtain governmental approval to commence and conduct mining on our future properties.

 

The possibility of more stringent regulations exists in the areas of worker health and safety, the dispositions of wastes, the decommissioning and reclamation of mining and milling sites and other environmental matters, each of which could have an adverse material effect on the costs or the viability of a particular project. Compliance with environmental considerations and permitting could have a material adverse effect on the costs or the viability of our projects.

 

We face substantial governmental regulation.

 

Safety

 

If we commence mining operations in the United States, for example, we will be subject to inspection and regulation by the Mine Safety and Health Administration of the United States Department of Labor ("MSHA") under the provisions of the Mine Safety and Health Act of 1977. The Occupational Safety and Health Administration ("OSHA") also has jurisdiction over safety and health standards not covered by MSHA.

 

Current Environmental Laws and Regulations

 

We must comply with environmental standards, laws and regulations that may result in greater or lesser costs and delays depending on the nature of the regulated activity and how stringently the regulations are implemented by the regulatory authority. The costs and delays associated with compliance with such laws and regulations could stop us from proceeding with the exploration of a project or the operation or future exploration of a mine. Laws and regulations involving the protection and remediation of the environment and the governmental policies for implementation of such laws and regulations are constantly changing and are generally becoming more restrictive. We expect to make in the future significant expenditures to comply with such laws and regulations. These requirements include regulations under many state and U.S. federal laws and regulations, including:

 

·the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA" or "Superfund") which regulates and establishes liability for the release of hazardous substances;
·the U.S. Endangered Species Act;
·the Clean Water Act;
·the Clean Air Act;
·the U.S. Resource Conservative and Recovery Act ("RCRA");
·the Migratory Bird Treaty Act;
·the Safe Drinking Water Act;
·the Emergency Planning and Community Right-to-Know Act;
·the Federal Land Policy and Management Act;
·the National Environmental Policy Act; and
·the National Historic Preservation Act.

 

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The United States Environmental Protection Agency continues the development of a solid waste regulatory program specific to mining operations such as our proposed operation, where the mineral extraction and beneficiation wastes are not regulated as hazardous wastes.

 

Our future properties may be in a historic mining district with past production and abandoned mines. We may be exposed to liability, or assertions of liability that would require expenditure of legal defense costs under joint and several liability statutes for cleanups of historical wastes that have not yet been completed.

 

Environmental Regulations

 

Environmental laws and regulations may also have an indirect impact on us, such as increased costs for electricity due to acid rain provisions of the United States Clean Air Act Amendments of 1990. Charges by refiners to which we may sell any metallic concentrates and products have substantially increased over the past several years because of requirements that refiners meet revised environmental quality standards. We have no control over the refiner's operations or their compliance with environmental laws and regulations.

 

Potential Legislation

 

Changes to the current laws and regulations governing the operations and activities of mining companies, including changes in permitting, environmental, title, health and safety, labor and tax laws, are actively considered from time to time. We cannot predict such changes, and such changes could have a material adverse impact on our business. Expenses associated with the compliance with such new laws or regulations could be material. Further, increased expenses could prevent or delay exploration projects and could, therefore, affect future levels of mineral production.

 

Governmental Regulation

 

If we commence mining operations in the future, we will be subject to inspection and regulation by:

 

·Mine Safety and Health Administration of the United States Department of Labor ("MSHA") under the provisions of the Mine Safety and Health Act of 1977.
   
·The Occupational Safety and Health Administration ("OSHA") also has jurisdiction over safety and health standards not covered by MSHA.

 

Environmental Liability

 

We are subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste rock and materials that could occur as a result of our mineral exploration and production. To the extent that we are subject to environmental liabilities, the payment of such liabilities or the costs that we may incur to remedy environmental pollution would reduce funds otherwise available to us and could have a material adverse effect on our financial condition or results of operations. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The potential exposure may be significant and could have a material adverse effect on us. We have not purchased insurance for environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) because it is not generally available at a reasonable price.

 

Environmental Permits

 

All of our exploration activities will be subject to regulation under one or more of the various State and federal environmental laws and regulations in the U.S. and in other countries. Many of the regulations require us to obtain permits for our activities. We must update and review our permits from time to time, and are subject to environmental impact analyses and public review processes prior to approval of the additional activities. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have a significant impact on some portion of our business, causing those activities to be economically reevaluated at that time.

 

9
 

 

Those risks include, but are not limited to, the risk that regulatory authorities may increase bonding requirements beyond our financial capabilities. The posting of bonding in accordance with regulatory determinations is a condition to the right to operate under all material operating permits, and therefore increases in bonding requirements could prevent our operations from continuing even if we were in full compliance with all substantive environmental laws.

 

There may be possible title defects on our future mining claims.

 

Undetected title defects could affect our interests in future mining claims acquired and owned by the Company in the future. We will investigate title to our future claims and may not obtain title opinions and title insurance with respect to such claims. This should not be construed as a guarantee of title and there is no guarantee that the title to our future properties will not be challenged or impugned. Any challenge to our title could delay the exploration, financing, and development of the property and could ultimately result in the loss of some or all of our interest in our properties. Our properties may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects.

 

We may not have access to all of the supplies and materials we need to begin exploration which could cause us to delay or suspend activities.

 

Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as dynamite, and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials when financing becomes available. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.

 

We will require additional funds to achieve our current business strategy goals. An inability to secure adequate funding will cause our business to fail.

 

Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the acquisition and exploration of natural resource properties. We will need to raise additional funds in the future through public or private debt or equity sales in order to fund our future operations and fulfill contractual obligations. These financings may not be available when needed. Even if these financings are available, it may be on terms that we deem unacceptable or are materially adverse to its interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current exploration, and as a result, could require us to diminish or suspend our operations and possibly cease our existence. Obtaining additional financing would be subject to a number of factors, including the market prices for the mineral property and silver and copper. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

 

Because our Directors serve as officers and directors of other companies engaged in mineral exploration, a potential conflict of interest could negatively impact our ability to acquire properties to explore and to run our business.

 

Certain directors work for other mining and mineral exploration companies. Due to time demands placed on our directors and officers, and due to the competitive nature of the exploration business, the potential exists for conflicts of interest to occur from time to time that could adversely affect our ability to conduct our business. Certain directors’ full-time employment with other entities limits the amount of time they can dedicate to us as a director. Our directors may have a conflict of interest in helping us identify and obtain the rights to mineral properties because they may also be considering the same properties. To mitigate these risks, we work with several geologists in order to ensure that we are not overly reliant on any one of our directors to provide us with geological services. However, we cannot be certain that a conflict of interest will not arise in the future. To date, there have not been any conflicts of interest between any of our directors or officers and the Company.

 

Our auditors have issued a going concern opinion expressing substantial doubt that we can continue.

 

As noted in our financial statements, the Company has incurred a net operating loss of $711, 706 through August 31, 2012. The Company has not commenced its operations and is still in the exploration stage, raising substantial doubt about the Company’s ability to continue as a going concern.

 

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In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management, significant shareholders and others sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.

 

Because of the speculative nature of exploration and development, there is a substantial risk that our business will fail.

 

The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the property options we have in Arizona prove to contain commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.

 

Because we have not commenced business operations, we face a high risk of business failure due to our inability to predict the success of our business

 

We are in the early stages of exploration of our mineral claims and thus have no way to evaluate the likelihood that we will be able to operate our business successfully. To date we have been involved primarily in organizational activities, and the acquisition and exploration of the mineral claims. We have not earned any revenues as of the date of this report.

 

Because of the unique difficulties and uncertainties inherent in mineral exploration and the mining business, we face a high risk of business failure

 

Potential investors should be aware of the difficulties normally encountered by early-stage mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

 

In addition, the search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

 

Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability

 

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. Therefore, we expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide shareholders and potential investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

 

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Because access to our mineral claim may be restricted by inclement weather, we may be delayed in our exploration

 

Access to our mineral properties may be restricted through some of the year due to weather in the area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations.

 

Because our President has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail

 

Because we are in the early stages of our business, Mr. Nott, the only officer of the company, will not be spending all of his time working for the Company. Mr. Nott will expend enough time to undertake the work programs that have been approved by the Company. Later, if the demands of our business require additional time from Mr. Nott, he is prepared to adjust his timetable to devote more time to our business. However, it still may not be possible for Mr. Nott to devote sufficient time to the management of our business, as and when needed, especially if the demands of Mr. Nott’s other interests increase. Competing demands on Mr. Nott’s time may lead to a divergence between his interests and the interests of our shareholders.

 

Risks Related To Governmental Regulations

 

As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration programs

 

There are several governmental regulations that materially restrict mineral exploration. We will be subject to the federal, state and local laws of the United States, where we carry out our exploration programs. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration programs.

 

Item 1B.  Unresolved Staff Comments.

 

None

 

Item 2.    Description of Properties.

 

The principal executive offices of the Company are leased and are located on the 4830 Impressario Court, Suite 109, Las Vegas, NV 89149.

 

Dome Rock Property

 

The Company entered into a mineral property purchase option agreement dated January 21, 2011 and amended on March 9th, 2011. This agreement was replaced by a new agreement dated January 17, 2012, pursuant to this new agreement the Company has a sole exclusive right and option to acquire a 100% undivided right, title and interest in 34 mineral claims, located in the La Paz County, Arizona, known as the Dome Rock Property, subject to 3.0% of net smelter royalty. The effect of the transactions was to preserve the Company’s rights under the old agreement and cash payments required under the old option agreement are still required under the new option agreement, but their due dates were all extended by approximately one year. In addition certain mineral claims were adjusted to reflect additional features not present in the original staking. The Company cannot apply prior payments to the new option agreement. Please refer to Note 3 - Mineral Property for the option payment schedule.

 

In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the exploration expenditures to be incurred in the succeeding period for no more than three consecutive years. In the event the exploration expenditures are not completed during the required time frame, any deficits will be paid in cash to the Optioner immediately after the end of the anniversary in which it occurs.

 

The Company has incurred $146,799 in exploration expenditures and 20,000 in option payments since entering into the Dome Rock property option agreements.

 

12
 

 

Description and Location of the Dome Rock Property

 

Note: The “Dome Rock” Property located in La Paz County, Arizona is identified in the maps below as “Dome Rock Property”.

 

 

 

The nearly 700 acre Dome Rock property, identified on the map as consists of 34 unpatented mining claims in the Dome Rock Mountains in the northwest area of the State of Arizona, located in the fairway tract of the world famous Walker Lane Gold Trend (the "Dome Rock Property"). The Walker Lane has historically produced over 50 million ounces of gold and 400 million ounces of silver. Dome Rock lies in the historic Plomosa District, 5 miles north of the town of Quartzite, Arizona and approximately 150 miles southeast of Las Vegas, Nevada. This region's Lode and Placer gold has been heavily sought after since the 18th century, and based on historical records and data from former claim holders, the Company believes this property has the potential to host a commercial gold find.

 

13
 

 

Exploration History of the Dome Rock Mountains

 

The history of mining in southwest Arizona extends back to the times of the early Spaniards in the Americas. Later, when the pioneers came to the region they found many old mines and prospect pits. Evidence of mining activity has been found throughout the Plomosa Mountains, Dome Rock Mountains, the Castle Dome area, and also present-day Ehrenberg. The discovery of gold placers in the Gila Mountains opened the door for American prospectors who scoured the mountains and deserts of Arizona in search of mineral wealth. The 1860's witnessed big strikes in the Bradshaw Mountains, Castle Dome Mountains, and Trigo Mountains. The La Paz District and the Rich Hill deposits were all discovered in the early 1860's. In 1894, the Fortuna vein was discovered on the west flank of the Gila Mountains, where the Fortuna Mine produced some $3 million in gold during its first decade of operation.

 

The placers in the La Paz district were discovered by Captain Pauline Weaver in January 1862, when he panned a small amount of gold from a gulch called El Arollo de la Tenaja in the Dome Rock Mountains. By 1866, the La Paz diggings had extended around the Dome Rock Mountains west of Jackpot and into Goodman Arroyo, Arroyo La Paz, Farrar Gulch, and over into Middle Camp and southward into the Orb Fino and La Cholla Placers. This sparked the beginning of the gold rush in the region, and led to about $1 million in placer gold recovered in the first year and another $1 million by 1864, which totaled about 96,800 ounces in the first 5 years.

 

The La Cholla District is located on the eastern slopes of the Dome Rock Mountains. Here the gold is found in a bed of loose quartz rubble that occurs at a depth of about 80 feet. The gold-bearing gravels were carried to the surface by the early miners - it is this quartz rubble in which present-day metal detectors find gold. La Cholla is one of the few places in the west where crystallized gold has been found.

 

In the area of the Dome Rock Mountains there are 3 locations where the majority of gold activity occurred: (a) La Cholla, located on the east side of the Dome Rock Mountains, about 7 miles west of Quartzite, in an east-west trending belt that stretches nearly 5 miles; (b) Middle Camp, at the east foot of the mountains, just north of the Oro Fino Placers, an area 4-5 miles E-W and 1 mile N-S, in which rich seams of gravel at bedrock hosting placer gold can be found; (c) Oro Fino, at the east foot of the mountains, where there are rich placers as well. On the west side of the Dome mountains, extensive placers and several lode mines have produced a total of about 100,000 gold ounces from dry wash placers and 5,000 ounces of lode gold from area veins. It is estimated that over $3 million worth of gold was recovered in the years 1868 to 1908.

 

The gold in placers is attributed to the erosion of the many gold-bearing veins distributed throughout the metamorphic rocks in the area. The largest areas of placer gravels are found along the more persistent gold-quartz veins.

 

Gunpowder's Dome Rock project is just 9 miles south of the famous Copperstone mine which is located at the Northern tip of the Dome Rock Mountain chain. To this day, Copperstone lays claim to the largest gold discovery in Arizona in recent history. Cyprus Gold profitably open pit mined 500,000oz of gold between 1983-1987. American Bonanza Gold Corporation is presently exploring the remaining underground resource, which contains a 0.363 oz/t oxide gold resource with 313,000 ounces of gold in the Measured and Indicated categories and 256,000 ounces of gold in the Proven and Probable Mineral Reserves category.

 

Geology of the Dome Rock Property

 

Dome Rock lies within the central-western region of Arizona which is characterized by north to northwest trending mountain ranges surrounded by alluvial plains, within the Basin and Range province of western Arizona loosely identified as middle to late Mesozoic in age.

 

Mid-Tertiary low-angle normal faults (detachment faults) are now recognized as fundamental regional structures in this region. The northern Dome Rock Mountains appear to structurally underlie the northeast-dipping Moon Mountain detachment fault, the lowest of a probable overlapping stack of detachment structures in the region. Some detachment faults host significant gold deposits, the nearest being the 500,000 oz. Copperstone deposit, located about 9 miles north of the property. The Copperstone deposit is located in quartz latite porphyry within the hanging wall of the Moon Mountain detachment fault. This fault is reportedly exposed in the Moon Mountains (an extension of the Dome Rock Mountains) north of the property. Other detachment fault gold deposits within about 70 miles include Picacho, Mesquite and Fancher.

 

14
 

 

The property lies south of Boyer Gap in rocks similar in age to those near the Copperstone deposit. Rocks present on the property are mostly metarhyodacite porphyry, metasedimentary-volcanic assemblage and south ridge augen gneiss. Middle Camp granite is present in the southeastern part of the property. These rock types are cut by dikes of schist, metadiorites and other rock types. Quartz veins are present here.

 

Gold occurs as native flakes within fault breccia, gouge and shear zones related to the faulting. The wall and host rocks are typically Triassic sediments and Jurassic quartz latite volcanics. Gold is commonly associated with hematite, chlorite, quartz, manganese oxide and copper oxide mineralization.

 

The Dome Basin Mine north of the property reportedly produced a small amount of copper, gold, and silver ore around 1900. The mine reportedly was located under a strong iron gossan and extensive epidotization over a metavolcanic rock, possibly an intrusive sill between sedimentary formations.

 

Dome Rock Claim

 

The property consists of steep ridges separated by deeply incised washes lying mostly on the northeast side of the Dome Rock Mountains. Topographic relief on the property is over 500 feet. A large, northeastward-trending wash system drains most of the eastern and central parts of the property. Smaller washes drain the extreme northern, western and southern parts. The property is accessible using a normal passenger vehicle. The site does not have any permanent equipment; water and electricity are not currently available.

 

Geological Exploration Program

 

The Dome Rock property is located in a region with extensive exploration history, indicating that resources are present and the prospect for economic recovery of gold support management's decision to proceed with further exploration. The property is located in close proximity to that of other major deposits along the same geological formation, and may have the potential to hold reserve deposits.

 

Current State of Exploration

 

In January, 2011, the Company engaged a third party vendor to commence Phase 1 of the Dome Rock Exploration Program. The program was to be conducted by an Arizona-registered professional geologist and planned to entail sediment sampling on several of the washes draining the claims. Sample locations were to be determined in the field and established by GPS. Outcrop chip sampling was also to be conducted and all samples were to be sent for independent assay.

 

On July 13, 2011, the Company announced completion of Phase 1-A of its Phase 1 Dome Rock Exploration program. The assay results were encouraging in that several of the samples presented similar metals ratios (Cu to Au) as other deposits in the district (Little Butte and Copperstone). Management considers this important because it indicates that the Dome Rock claim block may be proximal to economic mineralization. Several samples also contained the abundant hematite that is typical of ore grade mineralization in the Plomosa district. Based on the results of the data gathered and analyzed in the first phase (1-A) of the exploration program, the Company now has enough information to advance the project to its next phase (1-B). The Company is planning to map some of the geological structures that are present on the Dome Rock property and also take further rock chip samples, which will be submitted for assay. The Company’s objective is to delineate drill targets to move forward with an aggressive drilling program.

 

On December 16, 2011, the Company provided updated Phase 1-B results for one of its claim blocks in the Dome Rock Exploration Program. The work included sediment and outcrop chip sampling from within the company's 100% optioned BHR62 claim block. Project geologists collected 16 rock chip and 22 sediment samples, all of which were submitted for 34 element analysis by ICP (inductively-coupled plasma) and gold analysis by gold assay and ICP finish. Several of the samples were anomalous for both copper and gold, and there exist similar geochemical ratios of gold to copper as assays taken from other deposits in the immediate area. Positive results include assays of 17ppb Au, 3.5ppm Ag, 1,000ppm Cu, and strong pathfinder indications for Ba. Further, several samples exhibited copper and hematite staining which is sometimes associated with economic mineralization historically found in the Plomosa District of Arizona, including the Copperstone Mine area, approximately nine miles to the north of Quartzite.

 

15
 

 

On January 17, 2012, the Company announced that it had expanded its Dome Rock property through an option agreement with the Optionor to include an additional 33 unpatented claims south-of and contiguous-to its BHR62 claim. The Company expanded the project to include nearly seven hundred new acres as a result of the significant precious metals samples we've assayed south of, and contiguous to our BHR62 claim. The Company dispatched a field crew to carry out sampling on this new claim block and expects to advance to the next phase of its exploration program, at which point the technical team will be assessing specific drill targets.

 

On January 18, 2012, the Company announced further assay results of the recent sampling program conducted on the northern section of the new claim block. Several of the samples assayed strongly for gold, copper and silver, with the highest gold sample valued at 98.6 g/t Au. The assay results show precious metals indications continue to be strong from the Northern section which validates our decision to hold on to BHR62 and to further explore the surrounding area.

 

On January 19, 2012, the Company announced further results from its recent sampling program conducted on the southern section of the new claim block, approximately 2,500 feet south of BHR62. Several samples assayed strongly for gold, copper and silver, with three gold samples valued greater than 5.0 g/t Au. We now have a total of six samples that assayed greater than 2.0 g/t Au, including one at 98.6 g/t Au, and a copper hit at 4.25% g/t Cu. We are optimistic about the mineral potential on our new claim block. There are several old mine workings and prospects in the region. The majority of our significant Au/Cu samples came from quartz veining with iron oxide, hematite, and copper staining as visual indicators.

 

Item 3.  Legal Proceedings.

 

The Company is not currently a party in any legal proceedings, and there has been no previous bankruptcy, receivership, or similar proceedings involving the Company.

 

Item 4.  Mine Safety Disclosures

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) and Item 104 of Regulation S-K require certain mine safety disclosures to be made by companies that operate mines regulated under the Federal Mine Safety and Health Act of 1977. However, the requirements of the Act and Item 104 of Regulation S-K do not apply as the Company does not engage in mining activities. Therefore, the Company is not required to make such disclosures.

 

PART II

 

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

General

  

Market Information.

 

Our Common Stock is traded on the on the OTC-BB, a marketplace developed by the OTC Markets Group, Inc. (“OTC-BB”) under the ticker symbol “GUNP.” The OTCBB does not have any quantitative or qualitative standards such as those required for companies listed on Nasdaq. The following table sets forth the range of quarterly high and low closing bid prices of the Common Stock as reported on http://www.otcmarkets.com during the years ended August 31, 2012 and August 31, 2011:

 

Financial Quarter  Bid Price Information* 
Year  Quarter  High Bid Price   Low Bid Price 
2012  Fourth Quarter  $0.020   $0.005 
   Third Quarter  $0.020   $0.005 
   Second Quarter  $0.47   $0.028 
   First Quarter  $0.34   $0.17 
2011  Fourth Quarter  $0.265   $0.20 
   Third Quarter  $0.30   $0.20 
   Second Quarter  $1.18   $0.18 
   First Quarter  $1.19   $0.35 

 

(1) The Common Stock of the Company became eligible for trading on the over-the-counter Bulletin Board on December 6, 2010.

 

(2)

The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. 

 

16
 

 

Dividends

 

The Company has not declared or paid any dividends on its Common Stock and presently does not expect to declare or pay any such dividends in the foreseeable future.  The Company has not yet formulated a future dividend policy in the event restrictions on its ability to pay dividends are created.

 

Warrants or Options.

 

Please refer to Note 6 under the caption “Stockholders’ Equity and Warrants” for detailed information regarding outstanding warrants.

 

We have not granted any stock options to the executive officers or directors of the Company since our inception. Upon the further development of our business, we will likely grant options to directors and officers consistent with industry standards for junior mineral exploration companies.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities.

 

Please refer to Note 5 under the caption “Stockholders’ Equity and Warrants” for detailed information regarding private placements.

 

Purchases of Equity Securities by the Company and Affiliated Purchasers.

 

There were no purchases of equity securities by the Company or affiliates during the fiscal year ended August 31, 2012.

 

Item 6.  Selected Financial Data

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

Item 7.  Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

 

Overview

 

As a natural resource exploration company our focus is to locate prospective properties that may host mineral reserves that could eventually be put into mining production. With this in mind, we have to this date identified and secured interests in a mining claim with respect to property in the Walker Lane area in the State Arizona.

 

We do not presently intend to use any employees, with the exception of part-time clerical assistance on an as-needed basis. Outside advisors, attorneys or consultants will only be used if they can be obtained for a reasonable cost or for a deferred payment basis. Management is confident that it will be able to operate in this manner and continue during the next twelve months.

 

Plan of Operation

 

During the twelve-month period ending August 31, 2012, our objective is to continue to explore the properties subject to our mining claims. We continue to run our operations with the use of contract operators, and as such do not anticipate a material change to our company staffing levels. We remain focused on keeping the staff compliment, which currently consists of our two directors, at a minimum to conserve capital. Our staffing in no way hinders our operations, as outsourcing of necessary operations continues to be the most cost effective and efficient manner of conducting the business of the Company.

 

We do not anticipate any equipment purchases in the twelve months ending August 31, 2012.

 

The following is an overview of the project work to date, as well as anticipated work for the next twelve months. Specific dates when work will begin, and how long it will take to complete each step is subject to change due to the variables of weather, availability of work crews for a particular type of work, and the results of work that is planned, the outcome of which will determine what the next step on that project will be.

 

17
 

 

Dome Rock

 

Please refer to Note 3 "Mineral Property" for information regarding the Dome Rock Property.

 

Results of Operations

 

The Company did not have any operating income from the inception (November 19, 2008) through August 31, 2012. For the period from inception, November 19, 2008, through the year ended August 31, 2012, the Company recognized an accumulated deficit of $711,706.

 

Comparison of fiscal year ended August 31, 2012, to the fiscal year ended August 31, 2011:

 

General and Administrative costs. General and administrative costs decreased from $223,326 in the fiscal year ended August 31, 2011, to $118,959 during the fiscal year ended August 31, 2012, a decrease of 47%, because of the reduced legal fees, accounting fees, and consulting services.

 

Consulting Fees. Consulting fees decreased from $52,000 in the fiscal years ended August 31, 2011, compared to $48,084 during the fiscal year ended August 31, 2012.

 

Advertising and Marketing. Advertising and marketing costs decreased from $19,505 in the fiscal years ended August 31, 2011, compared to $5,900 during the fiscal year ended August 31, 2012.

 

Exploration Cost. The Company incurred $77,649 in exploration costs during the fiscal year ended August 31, 2011, compared to $69,150 exploration costs during the fiscal year ended August 31, 2012

 

Net Loss. The Company incurred a net loss from operations of $392,884 during the fiscal year ended August 31, 2011, compared to a net loss of $222,331 during the fiscal year ended August 31, 2012. This represents a decrease in loss of $170,553, or 43%. The decrease in net loss was attributable primarily to the decreases in its general administrative expenses, and advertising and marketing costs.

 

Liquidity and Capital Resource

 

At August 31, 2012, the Company had $34,509 in cash capital and must rely upon the issuance of Common Stock and additional capital contributions from shareholders and others to fund the capital expenditure requirements regarding the Dome Rock Option Agreement and to fund its administrative expenses pending full implementation of the Company’s business model.

 

Critical Accounting Policies

 

The Company’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”).  GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions.  We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 1 of our financial statements.  While all these significant accounting policies impact its financial condition and results of operations, the Company’s views certain of these policies as critical.  Policies determined to be critical are those policies that have the most significant impact on the Company’s financial statements and require management to use a greater degree of judgment and estimates.  Actual results may differ from those estimates.  Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

18
 

 

Item 7(A). Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

 

Item 8.  Financial Statements and Supplementary Data.

 

Item 9.  Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.  Controls and Procedures.

 

Changes in Internal Control Over Financial Reporting

 

During the most recently completed fiscal year ended August 31, 2012, the Company has had no changes in internal control over financial reporting.

 

Evaluation of Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

 

·Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and
·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’ s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

Our management evaluated (i) the effectiveness of our disclosure controls and procedures; and (ii) our internal controls over financial reporting as of August 31, 2012.  These evaluations were conducted by Michael Nott, the Company’s Chief Executive Officer and President.

 

Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported.

 

19
 

 

Limitations on the Effectiveness of Controls

 

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met. 

 

Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs.  These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control.  A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected

 

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this annual report.

 

Conclusion

 

Based upon Mr. Nott's evaluation under the framework in Internal Control — Integrated Framework, management concluded that our internal control over financial reporting was effective as of August 31, 2012. Based upon Mr. Nott's evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of August 31, 2012 and subject to the foregoing, Mr. Nott has concluded that the Company's disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

There have been no changes in the Company's disclosure controls and procedures and the Company's internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal controls.

 

Item 9(B).  Other Information.

 

None

PART III

 

Item 10.  Directors, Executive Officers and Corporate Governance.

 

All directors of our Company hold office until the next annual general meeting of the stockholders or until their successors are elected and qualified. The officers of our Company are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal. Our directors, executive officers and other significant employees, their ages, positions held and duration each person has held that position, are as follows:

 

Name Position Held with the Company Age Date First Appointed
Michael Nott Chief Executive Officer, President, Secretary and Treasurer 39 December 13, 2011
Neil Pestell(1) Chief Executive Officer, President, Secretary and Treasurer 43 December 13, 2011
Richard Kehmeier Director 64 January 24, 2011
Dennis Lance(2) Director 68 January 24, 2011

____________________

(1) On December 13, 2011, Mr. Pestell resigned from all positions in the Company.

(2) On October 25, 2012, Mr. Lance resigned from the Company as Director.

 

20
 

 

Business Background

 

The following is a brief account of the education and business experience of each director, executive officer and key employee during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.

 

Michael Nott is an accomplished geologist with more than a decade of experience in both the hard rock mining and petroleum industries. His areas of geographical expertise cover both Australia and North America, including Alberta, Saskatchewan and Colorado. Mr. Nott's areas of specialty include advanced geological mapping and interpretation, and geophysical interpretation. He has worked as a geologist for leading companies such as Santos Ltd., Encana, and also the Alberta Research Council. Mr. Nott graduated from the University of New Brunswick with a Bachelor of Science degree in geology (1999) and is a member of the Association of Professional Engineers, Geologists, and Geophysicists of Alberta.

 

Neil J. Pestell, Mr. Pestell has been the Chairman of the Board, President, Chief Financial Officer, Secretary, and Treasurer of the Company since August 10, 2010. From 2008 to 2010, he was the Chief Executive Officer and President of CPF (Thermal Solutions) L.T.D. that served as a consultant to various capital development projects in the United Kingdom, including sites in preparation for the 2012 summer Olympic games. Mr. Pestell was previously employed as a thermal insulation and systems engineer by NIC Construction in the United Kingdom, including the position of Development Manager. On December 13, 2011, Mr. Pestell resigned from all positions in the Company.

 

Richard Kehmeier is a Certified Professional Geologist with nearly forty years of international experience in all phases of resource development for the mining industry. Mr. Kehmeier has been the Senior Geologist for Vector Engineering Inc. in Golden, Colorado. During his career he has held such positions as Vice President of Exploration at Gold Reserve Corp and Atlas Corporation and has worked for companies such as Union Carbide, and Anaconda. Mr. Kehmeier graduated from the Colorado School of Mines with a Bachelor of Science in Geological Engineering and a Master of Science in Geology. Mr. Kehmeier is an exploration consultant to the Company and is paid $500 per month for such services.

 

Dennis Lance is an exploration geologist with more than 40 years of domestic and international experience in base and precious metals exploration. Mr. Lance has an extensive background both in field and management positions, and has worked for such companies as Phelps Dodge Corporation, Houston Oil and Minerals and USMX Inc. Mr. Lance has acted as an independent geological consultant to mining exploration companies, including Thunder Mountain Gold, Inc., from 2006 to present and Freegold Ventures Ltd., from 2006 to 2008 where his responsibilities were surveying, geochemistry, geological mapping and generative exploration work in preparation for 43-101 resource estimates. Mr. Lance earned a B.A. in Earth Science from California State University, and attended Graduate School at the Mackay School of Mines (University of Nevada). Mr. Lance became a Director of the Company on January 24, 2011, and is paid $500 per month for such services. On October 25, 2012, Mr. Lance resigned from the Company as Director.

 

No executive officer or director of the Company has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him or her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

 

No executive officer or director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

 

Consultants

 

The Company expects to use consultants in the future to the extent necessary and appropriate. The Company does not delegate its authority and responsibility to make management decisions to consultants or any other persons, nor shall any consultant have any discretionary authority or the authority to bind the Company in any material respect.

 

21
 

 

Item 11.  Executive Compensation.

 

All executive officers, for services in all capacities to the Company, received the following compensation during the fiscal years ended August 31, 2012 and 2011.

 

      Annual compensation   Long-Term Compensation Awards   Payouts 
Name and Principal Position  Fiscal Year  Salary (1)   Bonus   Other Annual Compensation   Restricted Stock Awards(2)   Securities Underlying Options/ SARs   LTIP Payouts   All Other Compensation 
Michael Nott,  2012  $0   $0   $17,000   $0   $0   $0   $0 
Chief Executive Officer, President, Secretary and Treasurer  2011  $0   $0   $0   $0   $0   $0   $0 
                                       
Neil J. Pestell,  2012  $0   $0   $16,084   $0   $0   $0   $0 
Chief Executive Officer, President, Secretary and Treasurer(3)  2011  $0   $0   $44,000   $0   $0   $0   $0 
                                       
                                       
All executive officers as a group     $0   $0   $77,084   $0   $0   $0   $0 

 

(1) Personal benefits received by the Company’s executive officers are valued below the levels which would otherwise require disclosure under the rules of the U.S. Securities and Exchange Commission.
   
(2) The Company does not currently provide any contingent or deferred forms of compensation arrangements, annuities, pension or retirement benefits.
   
(3) Mr. Pestell resigned from all positions on December 13, 2011.

 

Committees of the Board of Directors

 

The Company does not have an audit committee, compensation committee, nominating committee, or an executive committee of the Board of Directors.

 

Compliance with Section 16(a) of the Securities Exchange Act

 

Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who beneficially own more than ten percent of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

 

The Company encourages control persons to be up to date with their filings in relation to Section 16.

 

Benefit Plans

 

The Company does not have any pension plan, profit sharing plan, or similar plans for the benefit of its officers, directors or employees. However, the Company may establish such plans in the future.

 

22
 

 

Board Compensation

 

Directors of the Company have received $48,084 and $52,000 of compensation in their capacity as directors during the fiscal years ended August 31, 2012 and 2011, respectively. 

 

Director and Officer Indemnification and Limitations on Liability

 

Article 7 of our Articles of Incorporation and Article VII of our Bylaws limit the liability of directors, officers and employees to the fullest extent permitted by Nevada law. Consequently, our directors will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except in the following circumstances:

 

  * A violation of the criminal law, unless the director, officer, employee or agent had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful;
     
  * A transaction from which the director, officer, employee, or agent derived an improper personal benefit;
     
  * Willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor on in a proceeding by or in the right of a shareholder.

 

This limitation of liability does not apply arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and, is therefore, unenforceable.

 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth information on the ownership of the outstanding securities of the Company by officers and directors as well as those who own beneficially more than five percent of our outstanding Common Stock as of August 31, 2012.

 

Name and Address
of Beneficial Owner(1)
  Amount and Nature
of Beneficial Ownership
    Percentage of Class  
             
Michael Nott, CEO, President,
Secretary, Treasurer, Director
      0%  
             
Neil J. Pestell, (2) , CEO, President
Secretary, Treasurer, Director
  50,000,000 shares of Common Stock     54%  
             
Richard  Kehmeier, Director    —     0%  
             
Dennis L. Lance  (3) Director       0%  

__________________

(1) Under SEC Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of Common Stock actually outstanding on the date of this Information Statement.

 

(2) On December 13, 2011 Mr. Pestell resigned from all positions in the Company.

 

(3) On October 25, 2012, Mr. Lance resigned from the Company as Director.

 

23
 

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

 

None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since the beginning of our last fiscal year on September 1, 2012 or in any presently proposed transaction which, in either case, has or will materially affect us.

 

Item 14.  Principal Accounting Fees and Services.

 

The aggregate fees billed by our principal accounting firm for fees billed for fiscal years ended August 31, 2012 and 2011, are as follows:

 

Name  Audit Fees   Audit Related Fees   Tax Fees   All Other Fees 
                     
Seale and Beers, CPAs for fiscal year ended August 31, 2012  $8,000   $0   $0   $0 
                     
Seale and Beers, CPAs for fiscal year ended August 31, 2011  $11,250   $0   $0   $0 

 

 

The Company does not currently have an audit committee. As a result, our Board of Directors performs the duties and functions of an audit committee. The Company's Board of Directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.

 

PART IV

 

Item 15.  Exhibits. Financial Statement Schedules.

 

24
 

 

 

 

 

 

 

GUNPOWDER GOLD CORP.

(Formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

CONDENSED FINANCIAL STATEMENTS

 

August 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25
 

 

GUNPOWDER GOLD CORP.

(formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

Balance Sheet

 

ASSETS  

  August 31, 2012   August 31, 2011 
         
Current assets:          
Cash and cash equivalents  $34,509   $57,396 
Prepaid expense   14,000    5,436 
Deposit       542 
Total current assets  $48,509   $63,374 
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable and accrued liabilities  $284   $18,416 
Accounts payable to related-party   7,500    3,000 
Note payable to related-party       76,860 
Note payable   50,000     
Total current liabilities   57,784    98,276 
           
           
Stockholders' equity          
Preferred stock; $.001 par value, 5,000,000 shares authorized, zero shares issued and outstanding        
Common stock; $.001 par value, 300,000,000 shares authorized;92,641,961 and 90,000,000 shares issued and outstanding at August 31, 2012 and August 31, 2011, respectively   92,642    90,502 
Additional paid-in-capital   609,789    363,971 
Deficit accumulated during exploration stage   (711,706)   (489,375)
Total stockholders' equity   (9,275)   (34,902)
           
Total liabilities and stockholders' equity  $48,509   $63,374 

 

The accompanying notes are an integral part of the financial statements.

 

F-1
 

 

GUNPOWDER GOLD CORP.

(formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

Statements of Operations

 

           November 19, 2008 
           (Inception) 
   For year ended   For year ended   through 
   August 31, 2012   August 31, 2011   August 31, 2012 
             
Revenues  $   $   $ 
                
Operating expenses               
General and administrative   118,959    223,326    442,276 
Consulting fee - related-party   48,084    52,000    100,084 
Advertising and marketing   5,900    19,505    25,405 
Impairment loss on mineral claim       20,000    20,000 
Exploration cost   69,150    77,649    146,799 
    242,093    392,480    734,564 
                
Loss from operations   (242,093)   (392,480)   (734,564)
                
Other income (expense)               
Other income   20,087        23,587 
Interest expense   (100)       (100)
(Loss) from foreign exchange   (225)   (404)   (629)
Loss before income taxes   (222,331)   (392,884)   (711,706)
                
Income tax expense            
Net loss  $(222,331)  $(392,884)  $(711,706)
                
Basic and diluted loss per common share  $(0.00)  $(0.00)     
                
Basic and diluted weighted average  common shares outstanding   91,869,705    90,308,612      

 

 

The accompanying notes are an integral part of the financial statements.

 

F-2
 

GUNPOWDER GOLD CORP.

(formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

Statements of Stockholders' Equity

 

   Preferred stock   Common Stock   Additional
paid-in
   Accumulated Deficit during Development   Total Shareholders' 
   Shares   Amount   Shares   Amount   capital   Stage   (deficit) 
Balance November 19, 2008 (date of inception)      $       $   $   $   $ 
                                    
Common shares issued for cash on November 25, 2008 at $0.0001 per share           75,000,000    75,000    (67,500)       7,500 
                                    
Common shares issued for service on November 25, 2008 at $0.0001 per share           25,000,000    25,000    (22,500)       2,500 
                                    
Common shares issued relating to private placement, at $0.001 per share, net of $1,527 of offering costs           40,000,000    40,000    (1,527)       38,473 
                                    
Net (loss) from Inception through August 31, 2009                       (25,581)   (25,581)
                                    
Balance August 31, 2009      $    140,000,000   $140,000   $(91,527)  $(25,581)  $22,892 
                                    
Capital contribution, March 1 and May 6, 2010                       6,000         6,000 
                                    
Common shares cancelled, August 31, 2010           (50,000,000)   (50,000)   50,000         
                                    
Net (loss) for the year ended August 31, 2010                       (70,910)   (70,910)
                                    
Balance August 31, 2010      $    90,000,000   $90,000   $(35,527)  $(96,491)  $(42,018)
                                    
Common shares issued relating to private placement, February 24, 2011 at $0.75 per share,           266,667    267    199,733        200,000 
                                    
Common shares issued relating to private placement, April 8, 2011 at $0.85 per share,           235,294    235    199,765        200,000 
                                    
Net (loss) for the year ended August 31, 2011                       (392,884)   (392,884)
                                    
Balance August 31, 2011      $    90,501,961   $90,502   $363,971   $(489,375)  $(34,902)
                                    
Common shares issued relating to private placement, September 12, 2011 at $0.15 per share,           473,333    473    70,527        71,000 
                                    
Common shares issued relating to private placement, February 12, 2012 at $0.06 per share,           1,666,667    1,667    98,333        100,000 
                                    
Contributed capital                       100         100 
                                    
Forgiveness of debt                       76,858         76,858 
                                    
Net (loss) for the year ended August 31, 2012                       (222,331)   (222,331)
                                    
Balance August 31, 2012      $    92,641,961   $92,642   $609,789   $(711,706)  $(9,275)

 

All numbers have been retroactively stated per the 10:1 forward split effected in Nov 2010.

 

The accompanying notes are an integral part of the financial statements.

 

F-3
 

 

GUNPOWDER GOLD CORP.

(formerly: Spartan Business Services Corp.)

(An Exploration Stage Company)

Statements of Cash Flows

 

   For year ended
August 31, 2012
   For year ended
August 31, 2011
   November 19, 2008 (Inception) through August 31, 2012 
                
Operating activities:               
Net loss  $(222,331)  $(392,884)  $(711,706)
Adjustments to reconcile net loss to net cash used in operating activities:               
Amortization expense           10,000 
Stock issued for services           2,500 
Impairment loss on mineral claim        20,000    20,000 
Expenses paid by shareholder/officer       36,160    76,860 
Changes in operating assets and liabilities:               
(Increase) in prepaid expense   (8,564)   (5,436)   (24,000)
Decrease (increase) in deposit   542    (542)    
Increase in accounts payable to related-party   4,500    3,000    7,500 
Increase in accrued interest   100        100 
Increase (decrease) in accounts payable   (18,232)   16,938    184 
Net cash (used in) operating activities   (243,985)   (322,764)   (618,562)
                
Cash flows from investing activities:               
Purchase of mineral claims       (20,000)   (20,000)
Net cash (used in) investing activities       (20,000)   (20,000)
                
Financing activities:               
Capital contribution   100        6,100 
Payment for release of debt from shareholder   (2)   (2)     
Proceeds from issuance of note payable   50,000        50,000 
Proceeds from issuance of common stock   171,000    400,000    616,973 
Net cash provided by financing activities   221,098    400,000    673,071 
                
Net change in cash   (22,887)   57,236    34,509 
Cash, beginning of period   57,396    160     
Cash, ending of period  $34,509   $57,396   $34,509 
                
                
Supplemental cash flow disclosures               
Cash paid for:               
Interest expense  $   $   $ 
Income taxes  $   $   $ 
Non-cash activities:               
Issuance of common stock for services  $   $   $2,500 
(Loss) from foreign exchange  $225   $404   $629 
Debt forgiveness  $76,858   $   $76,858 

 

The accompanying notes are an integral part of the financial statements.

 

F-4
 

 

GUNPOWDER GOLD CORP.

(Formerly: Spartan Business Services Corp.)

(A Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS


 

Note 1. Nature of Business and Summary of Significant Accounting Policies

The summary of significant accounting policies is presented to assist in the understanding of the financial statements. The financial statements and notes are representations of management. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

 

Nature of business and organization

Gunpowder Gold Corp. (the “Company”), formerly named Spartan Business Services Corp., was incorporated in the State of Nevada on November 19, 2008. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and ASC Topic 915-10 “Development Stage Entities”. The Company has entered into an agreement to acquire a mineral property located in the La Paz County, Arizona, and has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of property expenditures will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreement and upon future profitable production or proceeds from the sale thereof.

 

On December 13, 2011 Mr. Neil Pestell resigned as President, Treasurer, Secretary and Director of the Company.

 

On December 13, 2011, Mr. Michael Nott was appointed President, Treasurer, Secretary and Director of the Company. Mr. Nott is paid $2,000 per month for his services to the Company.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Cash and cash equivalents

Cash and cash equivalents include interest bearing and non-interest bearing bank deposits, money market accounts, and short-term instruments with a liquidation provision of three month or less.

 

Revenue recognition

The Company has no revenues to date from its operations. Once revenues are generated, management will establish a revenue recognition policy.

 

Advertising costs

Advertising costs are generally expensed as incurred and are included in selling and marketing expenses in the accompanying statement of operations. As of August 31, 2012 and 2011, there were $5,900 and $19,505 advertising costs incurred respectively

 

Environmental expenditures

The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

 

F-5
 

 

Concentrations of credit risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts payable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

 

Impairment of Long-Lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

 

Mineral Rights and Exploration Costs

Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with FASB Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

 

Various factors could impact our ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models from exploration stage mineral interests. This, however, involves further risks in addition to those factors applicable to mineral interests where proven and proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

 

Risks and uncertainties

The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

 

Basic and diluted loss per share

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period.

 

In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

 

F-6
 

 

Comprehensive income

The Company accounts for comprehensive income (loss) in accordance with ASC Topic 220 "Reporting Comprehensive income" which requires comprehensive income (loss) and its components to be reported when a company has items of comprehensive income (loss). Comprehensive income (loss) includes net income (loss) plus other comprehensive income (loss). There are no differences or reconciling items between net income and comprehensive income for the years ended August 31, 2012 and 2011.

 

Income taxes

The Company accounts for its income taxes in accordance with ASC Topic 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets as of August 31, 2012 and 2011 are as follows:

 

Deferred tax assets:  2012   2011 
Net operating loss carryforwards  $711,706   $489,375 
Income tax rate   34%    34% 
    241,980    166,387 
Less valuation allowance   (241,980)   (166,387)
   $   $ 

 

Through August 31, 2012, a valuation allowance has been recorded to offset the deferred tax assets, including those related to the net operating losses carryforwards. At August 31, 2012, the Company had $711,706 of federal and state net operating losses carryforwards. The net operating loss carryforwards, if not utilized will begin to expire in 2028.

 

Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended August 31, 2012 and 2011 is as follows:

 

    2012    2011 
U.S. federal statutory income tax rate   34.0%    34.0% 
State tax - net of federal benefit   0.0%    0.0% 
    34.0%    34.0% 
Increase in valuation allowance   (34.0%)   (34.0%)
Effective tax rate   0.0%    0.0% 

 

Newly issued pronouncements

The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

 

F-7
 

 

Note 2.  Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a net operating loss of $711,706 through August 31, 2012. The Company has not commenced its operations, rather, still in the development stages, raising substantial doubt about the Company’s ability to continue as a going concern.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management has plans to seek additional capital through private placements of its common stock. Although there are no assurances that managements plans will be realized, they believe the company will be able to continue its operations in the future.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Note 3.  Mineral Property

 

The Company entered into a mineral property purchase option agreement dated January 21, 2011 and amended on March 9th, 2011. This agreement was replaced by a new agreement dated January 17, 2012, pursuant to this new agreement the Company has a sole and exclusive right and option to acquire a 100% undivided right, title and interest in 34 mineral claims, located in the La Paz County, Arizona, known as the Dome Rock Property. The effect of the transaction was to preserve the Company’s rights under the old agreement and cash payments required under the old option agreement are still required under the new option agreement, but their due dates were all extended by approximately one year. In addition certain mineral claims were adjusted to reflect additional features not present in the original staking. The Company cannot apply prior payments to the new option agreement. The Option shall be in good standing and exercisable by the Optionee by:

 

i.Paying the following amounts on or before the dates specified in the following schedule to the Optionor:

 

1.Paying $40,000 on or before January 17, 2013, the first anniversary of the Agreement ($20,000 paid to date);
2.Paying $40,000 on or before January 17, 2014, the second anniversary of the Agreement;
3.Paying $40,000 on or before January 17, 2015, the third anniversary of the Agreement;
4.Paying $50,000 on or before January 17, 2016, the fourth anniversary of the Agreement;
5.Paying $60,000 on or before January 17, 2017, the fifth anniversary of the Agreement;
6.Paying $60,000 on or before January 17, 2018, the sixth anniversary of the Agreement;
7.Paying $60,000 on or before January 17, 2019, the seventh anniversary of the Agreement;

 

ii.Paying all amounts to keep the property in good standing which includes all annual maintenance fees, exploration and other permits, property taxes, levies, insurance, and other assessments.

 

The Optionee shall incur the following annual work requirements as defined below and agreed to by the parties for the benefit of the Dome Rock Property:

 

1.Exploration expenditures on the property of $750,000 on or before the first anniversary of the execution of the Agreement; ($146,798 incurred to date)
2.Exploration expenditures on the property of $750,000 on or before the second anniversary of the execution of the Agreement;
3.Exploration expenditures on the property of $500,000 on or before the third anniversary of the execution of the Agreement;

 

F-8
 

 

In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the exploration expenditures to be incurred in the succeeding period for no more than three consecutive years. In the event the exploration expenditures are not completed during the required time frame, any deficits will be paid in cash to the Optioner immediately after the end of the anniversary in which it occurs.

 

The Company has incurred $146,798 in exploration expenditures and $20,000 in option payments since entering into the collective option agreements in January, 2011.

 

Note 4.  Related party transactions

 

During the year ended August 31, 2012 and 2011, a former director/shareholder paid $-0- and $36,160, respectively, of expenses on behalf of the Company from his personal account. These amounts are reflected as unsecured and non-interest bearing advances with no maturity date. On December 13, 2011, the former director /shareholder, agreed to forgive all debts owing to him by the Company for a nominal consideration of $2. The total amount of debt forgiven was $76,858 and was recorded as contributed capital.

During the year ended August 31, 2012 and 2011, the Company recorded consulting expenses payable to shareholders/officers of the Company in the amount of $48,084 and $52,000, respectively.

On August 31, 2012, the company had $7,500 of accounts payable due to two directors of the company.

 

Note 5.  Other income

 

During the year ended August 31, 2012, Solnik & Solnik forgave $14,415 of outstanding legal fees. The Company also wrote-off $5,672 in accrued professional fees payable to Post Capital, as the services for which the expenses were incurred were not performed. Management believes the likelihood is remote that these fees will ever be paid.

 

Note 6.  Note payable

 

On July 16, 2012, the Company entered into $50,000 loan agreement with a third party. The loan is unsecured, payable on demand, with prime plus 1% interest rate. As of August 31, 2012, $100 of accrued interest has been recorded.

 

Note 7.  Stockholders’ equity and warrants

 

The Company's articles of incorporation provide for the authorization of five million (5,000,000) shares of preferred stock with par values of $0.001 and three hundred million (300,000,000) shares of common stock with par value of $0.001. Common stock holders have all the rights and obligations that normally pertain to stockholders of Nevada corporations. As of August 31, 2012 the Company had 92,641,961 million shares of common stock issued and outstanding. The Company has not issued any shares of preferred stock.

 

On November 25, 2008 the Company issued 25,000,000 shares of common stock ($0.001 par value) to the Company’s president/shareholder for services provided valued at $2,500.

 

On November 25, 2008 the Company issued 75,000,000 shares of common stock ($0.001 par value) to the Company’s president/shareholder for cash totaling $7,500.

 

F-9
 

 

In April 2009, the Company initiated a Private Placement for the sale of 40,000,000 shares of common stock to investors at $0.001 per share. As of August 31, 2009, all subscriptions have been received from 26 investors, raising $38,473 in proceeds, net of $1,527 of offering costs.

 

On March 1, 2010 and May 6, 2010, the Company’s president/shareholder contributed a total of $6,000 to the Company as additional paid in capital to cover expenses. This money was contributed without any expectation of it being paid back, and was not in exchange for shares of the Company’s stock.

 

On August 31, 2010, a shareholder of the Company returned 50,000,000 restricted shares of common stock to treasury and the shares were cancelled by the Company.  The shares were returned to treasury for no consideration to the shareholder.

 

In November 2010, the Company revised and restated its articles of incorporation to increase the amount of authorized capital to 305,000,000 shares, consisting of 5,000,000 preferred shares and 300,000,000 shares of Common stock, and the Company had a 10:1 forward stock split. All references in the accompanying financial statements have been retroactively stated to reflect these changes.

 

The Company closed a private placement in February 2011, for the sale of 266,667 Units at $0.75 per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $0.90 per share during a term of two years, expiring on March 1, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $200,000 in proceeds from one investor.

 

The Company calculated the fair value of these warrants of $163,734 using the Black Scholes model. The Company used the following assumptions: stock price of $1.04, an exercise price of $0.90, expected term of 24 months (using the simplified method), volatility of 108%, and discount rate of 0.69%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

 

On April 8, 2011, the Company closed the private placement of 235,294 Units at .85 per unit per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $1.00 per share during a term expiring on April 15, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $200,000 in proceeds from one investor.

 

The Company calculated the fair value of these warrants of $40,235 using the Black Scholes model. The Company used the following assumptions: stock price of $0.53, an exercise price of $1.00, expected term of 24 months (using the simplified method), volatility of 94%, and discount rate of 0.45%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

 

On September 12, 2011, the Company closed the private placement of 473,333 Units at .15 per unit per Unit, for aggregate gross proceeds of $71,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $.25 per share during a term expiring on September 12, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $71,000 in proceeds from one investor.

 

The Company calculated the fair value of these warrants of $114,735 using the Black Scholes model. The Company used the following assumptions: stock price of $0.25, an exercise price of $0.25, expected term of 24 months (using the simplified method), volatility of 305%, and discount rate of 0.21%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

 

F-10
 

 

On February 14, 2012, the Company closed the private placement of 1,666,667 Units at $0.06 per unit, for aggregate gross proceeds of $100,000. The subscription raised $100,000 in proceeds from one non-US investor. There were no warrants issued with this subscription.

 

The following is a summary of the status of all of the Company’s stock warrants as of August 31, 2012.

 

   Number
Of Warrants
   Weighted-Average
Exercise Price
 
         
Outstanding at September 1, 2011   501,961   $0.00 
Granted   473,333   $0.61 
Exercised      $0.00 
Cancelled      $0.00 
Outstanding at August 31, 2012   975,294   $0.61 
Warrants exercisable at August 31, 2012   975,294   $0.61 

 

The following tables summarize information about stock warrants outstanding and exercisable at August 31, 2012:

 

STOCK WARRANTS OUTSTANDING AND EXERCISABLE 
Number of
Warrants
Outstanding
   Weighted- Average
Remaining
Contractual
Life in Years
   Weighted-
Average
Exercise Price
 
 975,294    0.72   $0.61 
 975,294    0.72   $0.61 

 

Note 8.  Subsequent events

 

The Company has evaluated all subsequent events through the date the financial statements have been issued and has determined that no other events occurred.

 

 

 

 

 

 

F-11
 

 

Exhibits

 

  1.1 The Articles of Incorporation of the Company are incorporated by reference herein to Exhibit 1.1 to its Form 8-A registration statement (formerly Spartan Business Services Corporation)
     
  1.2 An Amendment to the Articles of Incorporation of the Company is incorporated by reference herein to Exhibit 1.2 to its Form 8-A registration statement
     
  1.3 The By Laws of the Company are hereby incorporated herein by reference to Exhibit 3.2 of its Form S-1 registration statement (333-156796) filed on January 20, 2009 (formerly Spartan Business Services Corporation)
     
  1.4 Statement re: computation of per share earnings
     
    Reference is made to the statements of operations of the financial statements of the Company for the fiscal year ended August 31, 2012, included in this Form 10-K annual report of the Company.
     
  31.1 Certification of Michael Nott
     
  32.1 Certification of Michael Nott
     
  101.INS XBRL Instance Document
     
  101.SCH XBRL Schema Document
     
  101.CAL XBRL Calculation Linkbase Document
     
  101.DEF XBRL Definition Linkbase Document
     
  101.LAB XBRL Label Linkbase Document
     
  101.PRE XBRL Presentation Linkbase Document

 

 

 

 

 

 

F-12
 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Gunpowder Gold Corporation
   
Date: November 28, 2012 By:   /s/ Michael Nott
  Michael Nott
  Chief Executive Officer, President
     

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

Signature and Title   Date
     
/s/ Michael Nott   November 28, 2012
Michael Nott, Chief Executive Officer, President and Director    
     
/s/ Richard J. Kehmeier   November 28, 2012
Richard J. Kehmeier,  Director    
     

 

 

 

 

 

EX-31 2 gunpowder_10k-ex3100.htm CERTIFICATION

 

 

Exhibit 31

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

 

I, Michael Nott, certify that:

 

1.         I have reviewed this Annual Report on Form 10-K of the Company;

 

2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.        I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 

b.       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.       Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.       Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.         I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a.       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b.       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Dated: November 28, 2012

  By:   /s/ Michael Nott
  Michael Nott
  Chief Executive Officer, President, Treasurer and Secretary

EX-32 3 gunpowder_10k-ex3200.htm CERTIFICATION

 

 

Exhibit 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

Michael Nott, Chief Executive Officer, Chief Financial Officer, President, Secretary and Director of Gunpowder Gold Corp. (the “Company”) certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge, the Annual Report on Form 10-K of the Company for the year ended August 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: November 28, 2012

 

By: /s/ Michael Nott  
Name: Michael Nott
Title: Chief Executive Officer, Chief Financial Officer,
President, Treasurer, Secretary and Director

 

 

A signed original of this written statement required by Section 906 has been provided to Gunpowder Gold Corp. and will be retained by Gunpowder Gold Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

 

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    3. Mineral Property
    12 Months Ended
    Aug. 31, 2012
    Extractive Industries [Abstract]  
    3. Mineral Property

     

    The Company entered into a mineral property purchase option agreement dated January 21, 2011 and amended on March 9th, 2011. This agreement was replaced by a new agreement dated January 17, 2012, pursuant to this new agreement the Company has a sole and exclusive right and option to acquire a 100% undivided right, title and interest in 34 mineral claims, located in the La Paz County, Arizona, known as the Dome Rock Property. The effect of the transaction was to preserve the Company’s rights under the old agreement and cash payments required under the old option agreement are still required under the new option agreement, but their due dates were all extended by approximately one year. In addition certain mineral claims were adjusted to reflect additional features not present in the original staking. The Company cannot apply prior payments to the new option agreement. The Option shall be in good standing and exercisable by the Optionee by:

     

     i.          Paying the following amounts on or before the dates specified in the following schedule to the Optionor:

     

    1.Paying $40,000 on or before January 17, 2013, the first anniversary of the Agreement ($20,000 paid to date);
    2.Paying $40,000 on or before January 17, 2014, the second anniversary of the Agreement;
    3.Paying $40,000 on or before January 17, 2015, the third anniversary of the Agreement;
    4.Paying $50,000 on or before January 17, 2016, the fourth anniversary of the Agreement;
    5.Paying $60,000 on or before January 17, 2017, the fifth anniversary of the Agreement;
    6.Paying $60,000 on or before January 17, 2018, the sixth anniversary of the Agreement;
    7.Paying $60,000 on or before January 17, 2019, the seventh anniversary of the Agreement;

     

     ii.          Paying all amounts to keep the property in good standing which includes all annual maintenance fees, exploration and other permits, property taxes, levies, insurance, and other assessments.

     

    The Optionee shall incur the following annual work requirements as defined below and agreed to by the parties for the benefit of the Dome Rock Property:

     

    1.Exploration expenditures on the property of $750,000 on or before the first anniversary of the execution of the Agreement; ($146,798 incurred to date)
    2.Exploration expenditures on the property of $750,000 on or before the second anniversary of the execution of the Agreement;
    3.Exploration expenditures on the property of $500,000 on or before the third anniversary of the execution of the Agreement;

     

    In the event that the Optionee spends, in any period, more than the specified sum, the excess shall be carried forward and applied to the exploration expenditures to be incurred in the succeeding period for no more than three consecutive years. In the event the exploration expenditures are not completed during the required time frame, any deficits will be paid in cash to the Optioner immediately after the end of the anniversary in which it occurs.

     

    The Company has incurred $146,798 in exploration expenditures and $20,000 in option payments since entering into the collective option agreements in January, 2011.

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    2. Going Concern
    12 Months Ended
    Aug. 31, 2012
    Organization, Consolidation and Presentation of Financial Statements [Abstract]  
    2. Going Concern

     

    The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a net operating loss of $711,706 through August 31, 2012. The Company has not commenced its operations, rather, still in the development stages, raising substantial doubt about the Company’s ability to continue as a going concern.

     

    In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management has plans to seek additional capital through private placements of its common stock. Although there are no assurances that managements plans will be realized, they believe the company will be able to continue its operations in the future.

     

    The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

    XML 16 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Balance Sheets (USD $)
    Aug. 31, 2012
    Aug. 31, 2011
    Current assets:    
    Cash and cash equivalents $ 34,509 $ 57,396
    Prepaid expense 14,000 5,436
    Deposit    542
    Total current assets 48,509 63,374
    Current liabilities:    
    Accounts payable and accrued liabilities 284 18,416
    Accounts payable to related-party 7,500 3,000
    Note payable to related-party    76,860
    Note payable 50,000   
    Total current liabilities 57,784 98,276
    Stockholders' equity    
    Preferred stock; $.001 par value, 5,000,000 shares authorized, zero shares issued and outstanding      
    Common stock; $.001 par value, 300,000,000 shares authorized; 92,641,961 and 90,000,000 shares issued and outstanding at August 31, 2012 and August 31, 2011, respectively 92,642 90,502
    Additional paid-in-capital 609,789 363,971
    Deficit accumulated during exploration stage (711,706) (489,375)
    Total stockholders' equity (9,275) (34,902)
    Total liabilities and stockholders' equity $ 48,509 $ 63,374
    XML 17 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Statements of Cash Flows (USD $)
    12 Months Ended 45 Months Ended
    Aug. 31, 2012
    Aug. 31, 2011
    Aug. 31, 2012
    Operating activities:      
    Net loss $ (222,331) $ (392,884) $ (711,706)
    Adjustments to reconcile net loss to net cash used in operating activities:      
    Amortization expense       10,000
    Stock issued for services       2,500
    Impairment loss on mineral claim    20,000 20,000
    Expenses paid by shareholder/officer    36,160 76,860
    Changes in operating assets and liabilities:      
    (Increase) in prepaid expense (8,564) (5,436) (24,000)
    Decrease (increase) in deposit 542 (542)   
    Increase in accounts payable to related-party 4,500 3,000 7,500
    Increase in accrued interest 100    100
    Increase (decrease) in accounts payable (18,232) 16,938 184
    Net cash (used in) operating activities (243,985) (322,764) (618,562)
    Cash flows from investing activities:      
    Purchase of mineral claims    (20,000) (20,000)
    Net cash (used in) investing activities    (20,000) (20,000)
    Financing activities:      
    Capital contribution 100    6,100
    Payment for release of debt from shareholder (2)    (2)
    Proceeds from issuance of note payable 50,000    50,000
    Proceeds from issuance of common stock 171,000 400,000 616,973
    Net cash provided by financing activities 221,098 400,000 673,071
    Net change in cash (22,887) 57,236 34,509
    Cash, beginning of period 57,396 160   
    Cash, ending of period 34,509 57,396 34,509
    Supplemental cash flow disclosures      
    Interest expense         
    Income taxes         
    Non-cash activities:      
    Issuance of common stock for services       2,500
    (Loss) from foreign exchange 225 404 629
    Debt forgiveness $ 76,858    $ 76,858
    XML 18 R22.htm IDEA: XBRL DOCUMENT v2.4.0.6
    5. Other Income (Details Narrative) (USD $)
    Aug. 31, 2012
    Other Income Details Narrative  
    Legal fees forgiven $ 14,415
    Accrued professional fees written off $ 5,672
    XML 19 R24.htm IDEA: XBRL DOCUMENT v2.4.0.6
    7. Stockholders' equity and warrants (Details) (USD $)
    12 Months Ended
    Aug. 31, 2012
    Number of Warrants  
    Warrants outstanding - beginning balance 501,961
    Warrants granted 473,333
    Warrants outstanding - ending balance 975,294
    Warrants exercisable 975,294
    Weighted Average Exercise Price  
    Weighted average exercise price - beginning balance $ 0.00
    Weighted average exercise price granted $ 0.61
    Weighted average exercise price exercised $ 0.00
    Weighted average exercise price cancelled $ 0.00
    Weighted average exercise price - ending balance $ 0.61
    Weighted average exercise price exercisable $ 0.61
    Weighted Average Remaining Contractual Life in Years 8 months 19 days
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    XML 21 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
    1. Nature of Business and Summary of Significant Accounting Policies
    12 Months Ended
    Aug. 31, 2012
    Organization, Consolidation and Presentation of Financial Statements [Abstract]  
    1. Nature of Business and Summary of Significant Accounting Policies

    Note 1. Nature of Business and Summary of Significant Accounting Policies

    The summary of significant accounting policies is presented to assist in the understanding of the financial statements. The financial statements and notes are representations of management. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

    Nature of business and organization

    Gunpowder Gold Corp. (the “Company”), formerly named Spartan Business Services Corp., was incorporated in the State of Nevada on November 19, 2008. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and ASC Topic 915-10 “Development Stage Entities”. The Company has entered into an agreement to acquire a mineral property located in the La Paz County, Arizona, and has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of property expenditures will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreement and upon future profitable production or proceeds from the sale thereof.

     

    On December 13, 2011 Mr. Neil Pestell resigned as President, Treasurer, Secretary and Director of the Company.

     

    On December 13, 2011, Mr. Michael Nott was appointed President, Treasurer, Secretary and Director of the Company. Mr. Nott is paid $2,000 per month for his services to the Company.

     

    Use of estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     

    Cash and cash equivalents

    Cash and cash equivalents include interest bearing and non-interest bearing bank deposits, money market accounts, and short-term instruments with a liquidation provision of three month or less.

    Revenue recognition

    The Company has no revenues to date from its operations. Once revenues are generated, management will establish a revenue recognition policy.

    Advertising costs

    Advertising costs are generally expensed as incurred and are included in selling and marketing expenses in the accompanying statement of operations. As of August 31, 2012 and 2011, there were $5,900 and $19,505 advertising costs incurred respectively

    Environmental expenditures

    The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

    Concentrations of credit risk

    The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts payable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

     

    Impairment of Long-Lived Assets

    The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

     

    Mineral Rights and Exploration Costs

    Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with FASB Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

     

    Various factors could impact our ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models from exploration stage mineral interests. This, however, involves further risks in addition to those factors applicable to mineral interests where proven and proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

     

    Risks and uncertainties

    The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

     

    Basic and diluted loss per share

    The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period.

     

    In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

     

    Comprehensive income

    The Company accounts for comprehensive income (loss) in accordance with ASC Topic 220 "Reporting Comprehensive income" which requires comprehensive income (loss) and its components to be reported when a company has items of comprehensive income (loss). Comprehensive income (loss) includes net income (loss) plus other comprehensive income (loss). There are no differences or reconciling items between net income and comprehensive income for the years ended August 31, 2012 and 2011.

    Income taxes

    The Company accounts for its income taxes in accordance with ASC Topic 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets as of August 31, 2012 and 2011 are as follows:

     

    Deferred tax assets:   2012    2011 
    Net operating loss carryforwards  $711,706   $489,375 
     Income tax rate   34%   34%
        241,980    166,387 
    Less valuation allowance   (241,980)   (166,387)
       $   $ 

    Through August 31, 2012, a valuation allowance has been recorded to offset the deferred tax assets, including those related to the net operating losses carryforwards. At August 31, 2012, the Company had $711,706 of federal and state net operating losses carryforwards. The net operating loss carryforwards, if not utilized will begin to expire in 2028.

     

    Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended August 31, 2012 and 2011 is as follows: 

     

        2012    2011 
    U.S. federal statutory income tax rate   34.0%   34.0%
    State tax - net of federal benefit   0.0%   0.0%
        34.0%   34.0%
    Increase in valuation allowance   (34.0%)   (34.0%)
       Effective tax rate   0.0%   0.0%

     

    Newly issued pronouncements

    The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

    XML 22 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Balance Sheets (Parenthetical) (USD $)
    Aug. 31, 2012
    Aug. 31, 2011
    Statement of Financial Position [Abstract]    
    Preferred stock, par value $ 0.001 $ 0.001
    Preferred stock, shares authorized 5,000,000 5,000,000
    Preferred stock, shares issued 0 0
    Preferred stock, shares outstanding 0 0
    Common stock, par value $ 0.001 $ 0.001
    Common stock, shares authorized 300,000,000 300,000,000
    Common stock, shares issued 92,641,961 90,000,000
    Common stock, shares outstanding 92,641,961 90,000,000
    XML 23 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
    7. Stockholders' equity and warrants (Tables)
    12 Months Ended
    Aug. 31, 2012
    Stockholders Equity And Warrants Tables  
    Summary of stock warrants

    The following is a summary of the status of all of the Company’s stock warrants as of August 31, 2012.

     

       

    Number

    Of Warrants

       

    Weighted-Average

    Exercise Price

     
                 
    Outstanding at September 1, 2011     501,961     $ 0.00  
    Granted     473,333     $ 0.61  
    Exercised     -     $ 0.00  
    Cancelled     -     $ 0.00  
    Outstanding at August 31, 2012     975,294     $ 0.61  
    Warrants exercisable at August 31, 2012     975,294     $ 0.61  

     

    The following tables summarize information about stock warrants outstanding and exercisable at August 31, 2012:

     

    STOCK WARRANTS OUTSTANDING AND EXERCISABLE  

    Number of

    Warrants

    Outstanding

       

    Weighted-Average

    Remaining

    Contractual

    Life in Years

       

    Weighted-

    Average

    Exercise Price

     
      975,294       0.72     $ 0.61  
      975,294       0.72     $ 0.61  

     

    XML 24 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Document and Entity Information (USD $)
    12 Months Ended
    Aug. 31, 2012
    Nov. 26, 2012
    Feb. 28, 2012
    Document And Entity Information      
    Entity Registrant Name Gunpowder Gold Corp    
    Entity Central Index Key 0001454298    
    Document Type 10-K    
    Document Period End Date Aug. 31, 2012    
    Amendment Flag false    
    Current Fiscal Year End Date --08-31    
    Is Entity a Well-known Seasoned Issuer? No    
    Is Entity a Voluntary Filer? No    
    Is Entity's Reporting Status Current? Yes    
    Entity Filer Category Smaller Reporting Company    
    Entity Public Float     $ 247,323
    Entity Common Stock, Shares Outstanding   92,641,961  
    Document Fiscal Period Focus FY    
    Document Fiscal Year Focus 2012    
    XML 25 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
    1. Nature of Business and Summary of Significant Accounting Policies (Details) (USD $)
    12 Months Ended
    Aug. 31, 2012
    Aug. 31, 2011
    Deferred tax assets:    
    Net operating loss carryforwards $ 711,706 $ 489,375
    Income tax rate 34.00% 34.00%
    Deferred income taxes 241,980 166,387
    Less valuation allowance $ (241,980) $ (166,387)
    XML 26 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Statements of Operations (USD $)
    12 Months Ended 45 Months Ended
    Aug. 31, 2012
    Aug. 31, 2011
    Aug. 31, 2012
    Income Statement [Abstract]      
    Revenues         
    Operating expenses      
    General and administrative 118,959 223,326 442,276
    Consulting fee - related-party 48,084 52,000 100,084
    Advertising and marketing 5,900 19,505 25,405
    Impairment loss on mineral claim    20,000 20,000
    Exploration cost 69,150 77,649 146,799
    Total operating expenses 242,093 392,480 734,564
    Loss from operations (242,093) (392,480) (734,564)
    Other income 20,087    23,587
    Interest expense (100)    (100)
    (Loss) from foreign exchange (225) (404) (629)
    Loss before income taxes (222,331) (392,884) (711,706)
    Income tax expense         
    Net loss $ (222,331) $ (392,884) $ (711,706)
    Basic and diluted loss per common share $ 0.00 $ 0.00  
    Basic and diluted weighted average common shares outstanding 91,869,705 90,308,612  
    XML 27 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
    6. Note payable
    12 Months Ended
    Aug. 31, 2012
    Debt Disclosure [Abstract]  
    6. Note payable

    On July 16, 2012, the Company entered into $50,000 loan agreement with a third party. The loan is unsecured, payable on demand, with prime plus 1% interest rate. As of August 31, 2012, $100 of accrued interest has been recorded.

    XML 28 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
    5. Other Income
    12 Months Ended
    Aug. 31, 2012
    Other income (expense)  
    5. Other Income

    During the year ended August 31, 2012, Solnik & Solnik forgave $14,415 of outstanding legal fees. The Company also wrote-off $5,672 in accrued professional fees payable to Post Capital, as the services for which the expenses were incurred were not performed. Management believes the likelihood is remote that these fees will ever be paid.

    XML 29 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
    6. Note payable (Details Narrative) (USD $)
    Aug. 31, 2012
    Note Payable Details Narrative  
    Debt face value $ 50,000
    Accrued interest recorded $ 100
    XML 30 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
    1. Nature of Business and Summary of Significant Accounting Policies (Details 2)
    12 Months Ended
    Aug. 31, 2012
    Aug. 31, 2011
    Nature Of Business And Summary Of Significant Accounting Policies Details 2    
    U.S. federal statutory income tax rate 34.00% 34.00%
    State tax - net of federal benefit 0.00% 0.00%
    Total income tax rate 34.00% 34.00%
    Increase in valuation allowance (34.00%) (34.00%)
    Effective tax rate 0.00% 0.00%
    XML 31 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
    1. Nature of Business and Summary of Significant Accounting Policies (Policies)
    12 Months Ended
    Aug. 31, 2012
    Organization, Consolidation and Presentation of Financial Statements [Abstract]  
    Nature of business and organization

    Nature of business and organization

    Gunpowder Gold Corp. (the “Company”), formerly named Spartan Business Services Corp., was incorporated in the State of Nevada on November 19, 2008. The Company is an Exploration Stage Company as defined by Guide 7 of the Securities Exchange Commission’s Industry Guide and ASC Topic 915-10 “Development Stage Entities”. The Company has entered into an agreement to acquire a mineral property located in the La Paz County, Arizona, and has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of property expenditures will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreement and upon future profitable production or proceeds from the sale thereof.

     

    On December 13, 2011 Mr. Neil Pestell resigned as President, Treasurer, Secretary and Director of the Company.

     

    On December 13, 2011, Mr. Michael Nott was appointed President, Treasurer, Secretary and Director of the Company. Mr. Nott is paid $2,000 per month for his services to the Company.

    Use of estimates

    Use of estimates

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

    Cash and cash equivalents

    Cash and cash equivalents

    Cash and cash equivalents include interest bearing and non-interest bearing bank deposits, money market accounts, and short-term instruments with a liquidation provision of three month or less.

    Revenue recognition

    Revenue recognition

    The Company has no revenues to date from its operations. Once revenues are generated, management will establish a revenue recognition policy.

    Advertising costs

    Advertising costs

    Advertising costs are generally expensed as incurred and are included in selling and marketing expenses in the accompanying statement of operations. As of August 31, 2012 and 2011, there were $5,900 and $19,505 advertising costs incurred respectively

    Environmental expenditures

    Environmental expenditures

    The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees, by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.

    Concentrations of credit risk

    Concentrations of credit risk

    The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and accounts payable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.

    Impairment of Long-Lived Assets

    Impairment of Long-Lived Assets

    The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17, if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

     

    Mineral Rights and Exploration Costs

    Mineral Rights and Exploration Costs

    Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs including related property and equipment costs. To determine if these costs are in excess of their recoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with FASB Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

     

    Various factors could impact our ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models from exploration stage mineral interests. This, however, involves further risks in addition to those factors applicable to mineral interests where proven and proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

    Risks and uncertainties

    Risks and uncertainties

    The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including the potential risk of business failure.

    Basic and diluted loss per share

    Basic and diluted loss per share

    The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period.

     

    In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

    Comprehensive income

    Comprehensive income

    The Company accounts for comprehensive income (loss) in accordance with ASC Topic 220 "Reporting Comprehensive income" which requires comprehensive income (loss) and its components to be reported when a company has items of comprehensive income (loss). Comprehensive income (loss) includes net income (loss) plus other comprehensive income (loss). There are no differences or reconciling items between net income and comprehensive income for the years ended August 31, 2012 and 2011.

    Income taxes

    Income taxes

    The Company accounts for its income taxes in accordance with ASC Topic 740, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets as of August 31, 2012 and 2011 are as follows:

     

    Deferred tax assets:   2012    2011 
    Net operating loss carryforwards  $711,706   $489,375 
    Income tax rate   34%   34%
        241,980    166,387 
    Less valuation allowance   (241,980)   (166,387)
       $   $ 

    Through August 31, 2012, a valuation allowance has been recorded to offset the deferred tax assets, including those related to the net operating losses carryforwards. At August 31, 2012, the Company had $711,706 of federal and state net operating losses carryforwards. The net operating loss carryforwards, if not utilized will begin to expire in 2028.

     

    Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended August 31, 2012 and 2011 is as follows 

     

        2012    2011 
    U.S. federal statutory income tax rate   34.0%   34.0%
    State tax - net of federal benefit   0.0%   0.0%
        34.0%   34.0%
    Increase in valuation allowance   (34.0%)   (34.0%)
       Effective tax rate   0.0%   0.0%
    Newly issued pronouncements

    Newly issued pronouncements

    The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial statements.

    XML 32 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
    7. Stockholders' equity and warrants
    12 Months Ended
    Aug. 31, 2012
    Equity [Abstract]  
    7. Stockholders' equity and warrants

    The Company's articles of incorporation provide for the authorization of five million (5,000,000) shares of preferred stock with par values of $0.001 and three hundred million (300,000,000) shares of common stock with par value of $0.001. Common stock holders have all the rights and obligations that normally pertain to stockholders of Nevada corporations. As of August 31, 2012 the Company had 92,641,961 million shares of common stock issued and outstanding. The Company has not issued any shares of preferred stock.

     

    On November 25, 2008 the Company issued 25,000,000 shares of common stock ($0.001 par value) to the Company’s president/shareholder for services provided valued at $2,500.

     

    On November 25, 2008 the Company issued 75,000,000 shares of common stock ($0.001 par value) to the Company’s president/shareholder for cash totaling $7,500.

     

    In April 2009, the Company initiated a Private Placement for the sale of 40,000,000 shares of common stock to investors at $0.001 per share. As of August 31, 2009, all subscriptions have been received from 26 investors, raising $38,473 in proceeds, net of $1,527 of offering costs.

     

    On March 1, 2010 and May 6, 2010, the Company’s president/shareholder contributed a total of $6,000 to the Company as additional paid in capital to cover expenses. This money was contributed without any expectation of it being paid back, and was not in exchange for shares of the Company’s stock.

     

    On August 31, 2010, a shareholder of the Company returned 50,000,000 restricted shares of common stock to treasury and the shares were cancelled by the Company.  The shares were returned to treasury for no consideration to the shareholder.

     

    In November 2010, the Company revised and restated its articles of incorporation to increase the amount of authorized capital to 305,000,000 shares, consisting of 5,000,000 preferred shares and 300,000,000 shares of Common stock, and the Company had a 10:1 forward stock split. All references in the accompanying financial statements have been retroactively stated to reflect these changes.

     

    The Company closed a private placement in February 2011, for the sale of 266,667 Units at $0.75 per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $0.90 per share during a term of two years, expiring on March 1, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $200,000 in proceeds from one investor.

     

    The Company calculated the fair value of these warrants of $163,734 using the Black Scholes model. The Company used the following assumptions: stock price of $1.04, an exercise price of $0.90, expected term of 24 months (using the simplified method), volatility of 108%, and discount rate of 0.69%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

     

    On April 8, 2011, the Company closed the private placement of 235,294 Units at .85 per unit per Unit, for aggregate gross proceeds of $200,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $1.00 per share during a term expiring on April 15, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $200,000 in proceeds from one investor.

     

    The Company calculated the fair value of these warrants of $40,235 using the Black Scholes model. The Company used the following assumptions: stock price of $0.53, an exercise price of $1.00, expected term of 24 months (using the simplified method), volatility of 94%, and discount rate of 0.45%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

     

    On September 12, 2011, the Company closed the private placement of 473,333 Units at .15 per unit per Unit, for aggregate gross proceeds of $71,000. A “Unit” consisted of the following: (1) one share of common stock; (2) one class A warrant, entitling the holder to purchase one share of common stock of the Company at an exercise price of $.25 per share during a term expiring on September 12, 2013. No warrants have been exercised as of August 31, 2012. The subscription raised $71,000 in proceeds from one investor.

     

    The Company calculated the fair value of these warrants of $114,735 using the Black Scholes model. The Company used the following assumptions: stock price of $0.25, an exercise price of $0.25, expected term of 24 months (using the simplified method), volatility of 305%, and discount rate of 0.21%. The fair value of the warrants is treated as offering costs and it would be a debit and credit entry to additional paid in capital resulting in a null effect in net equity.

     

    On February 14, 2012, the Company closed the private placement of 1,666,667 Units at $0.06 per unit, for aggregate gross proceeds of $100,000. The subscription raised $100,000 in proceeds from one non-US investor. There were no warrants issued with this subscription.

     

    The following is a summary of the status of all of the Company’s stock warrants as of August 31, 2012.

     

       

    Number

    Of Warrants

       

    Weighted-Average

    Exercise Price

     
                 
    Outstanding at September 1, 2011     501,961     $ 0.00  
    Granted     473,333     $ 0.61  
    Exercised     -     $ 0.00  
    Cancelled     -     $ 0.00  
    Outstanding at August 31, 2012     975,294     $ 0.61  
    Warrants exercisable at August 31, 2012     975,294     $ 0.61  

     

    The following tables summarize information about stock warrants outstanding and exercisable at August 31, 2012:

     

    STOCK WARRANTS OUTSTANDING AND EXERCISABLE  

    Number of

    Warrants

    Outstanding

       

    Weighted-Average

    Remaining

    Contractual

    Life in Years

       

    Weighted-

    Average

    Exercise Price

     
      975,294       0.72     $ 0.61  
      975,294       0.72     $ 0.61  

     

    XML 33 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
    8. Subsequent events
    12 Months Ended
    Aug. 31, 2012
    Subsequent Events [Abstract]  
    8. Subsequent events

    The Company has evaluated all subsequent events through the date the financial statements have been issued and has determined that no other events occurred.

    XML 34 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
    1. Nature of Business and Summary of Significant Accounting Policies (Tables)
    12 Months Ended
    Aug. 31, 2012
    Nature Of Business And Summary Of Significant Accounting Policies Tables  
    Deferred income taxes

    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets as of August 31, 2012 and 2011 are as follows:

     

    Deferred tax assets:   2012    2011 
    Net operating loss carryforwards  $711,706   $489,375 
     Income tax rate   34%   34%
        241,980    166,387 
    Less valuation allowance   (241,980)   (166,387)
       $   $ 

    Income tax rate
        2012    2011 
    U.S. federal statutory income tax rate   34.0%   34.0%
    State tax - net of federal benefit   0.0%   0.0%
        34.0%   34.0%
    Increase in valuation allowance   (34.0%)   (34.0%)
       Effective tax rate   0.0%   0.0%
    XML 35 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
    4. Related party transactions (Details Narrative) (USD $)
    12 Months Ended
    Aug. 31, 2012
    Aug. 31, 2011
    Related Party Transactions Details Narrative    
    Expenses paid by shareholder $ 0 $ 36,160
    Consulting expenses payable to shareholder/officer $ 48,084 $ 52,000
    XML 36 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
    Statements of Stockholders' Equity (USD $)
    Preferred Stock
    Common Stock
    Additional Paid-In Capital
    Retained Earnings / Accumulated Deficit
    Total
    Beginning balance, amount at Nov. 18, 2008               
    Beginning balance, shares at Nov. 18, 2008            
    Common stock issued for cash, shares   75,000,000      
    Common stock issued for cash, amount   75,000 (67,500)   7,500
    Common stock issued for services, shares   25,000,000      
    Common stock issued for services, amount   25,000 (22,500)   2,500
    Common stock issued in private placement, shares   40,000,000      
    Common stock issued in private placement, amount   40,000 (1,527)   38,473
    Net (loss)       (25,581) (25,581)
    Ending balance, amount at Aug. 31, 2009   140,000 (91,527) (25,581) 22,892
    Ending balance, shares at Aug. 31, 2009    140,000,000      
    Capital contribution     6,000   6,000
    Common shares cancelled, shares   (50,000,000)      
    Common shares cancelled, amount   (50,000) 50,000     
    Net (loss)       (70,910) (70,910)
    Ending balance, amount at Aug. 31, 2010   90,000 (35,527) (96,491) (42,018)
    Ending balance, shares at Aug. 31, 2010   90,000,000      
    Common stock issued in private placement, shares   266,667      
    Common stock issued in private placement, amount   267 199,733   200,000
    Common stock issued in private placement, shares   235,294      
    Common stock issued in private placement, amount   235 199,765   200,000
    Forgiveness of debt           
    Net (loss)       (392,884) (392,884)
    Ending balance, amount at Aug. 31, 2011   90,502 363,971 (489,375) (34,902)
    Ending balance, shares at Aug. 31, 2011   90,501,961      
    Capital contribution     100   100
    Common stock issued in private placement, shares   473,333      
    Common stock issued in private placement, amount   473 70,527   71,000
    Common stock issued in private placement, shares   1,666,667      
    Common stock issued in private placement, amount   1,667 98,333   100,000
    Forgiveness of debt     76,858   76,858
    Net (loss)       (222,331) (222,331)
    Ending balance, amount at Aug. 31, 2012   $ 92,642 $ 609,789 $ (711,706) $ (9,275)
    Ending balance, shares at Aug. 31, 2012   92,641,961      
    XML 37 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
    4. Related party transactions
    12 Months Ended
    Aug. 31, 2012
    Related Party Transactions [Abstract]  
    4. Related party transactions

    During the year ended August 31, 2012 and 2011, a former director/shareholder paid $-0- and $36,160, respectively, of expenses on behalf of the Company from his personal account. These amounts are reflected as unsecured and non-interest bearing advances with no maturity date. On December 13, 2011, the former director /shareholder, agreed to forgive all debts owing to him by the Company for a nominal consideration of $2. The total amount of debt forgiven was $76,858 and was recorded as contributed capital.

    During the year ended August 31, 2012 and 2011, the Company recorded consulting expenses payable to shareholders/officers of the Company in the amount of $48,084 and $52,000, respectively.

    On August 31, 2012, the company had $7,500 of accounts payable due to two directors of the company.

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    3. Mineral Property (Details Narrative) (USD $)
    12 Months Ended
    Aug. 31, 2012
    Option payment due:  
    Due on the first anniversary of the Agreement $ 40,000
    Due on the second anniversary of the Agreement 40,000
    Due on the third anniversary of the Agreement 40,000
    Due on the fourth anniversary of the Agreement 50,000
    Due on the fifth anniversary of the Agreement 60,000
    Due on the sixth anniversary of the Agreement 60,000
    Due on the seventh anniversary of the Agreement 60,000
    Exploration expenditures required during year one 750,000
    Exploration expenditures required during year two 750,000
    Exploration expenditures required during year three 500,000
    Exploration expenses incurred 146,798
    Option payments made $ 20,000